Conceptualising Insurance: risk management under conditions of solvency

Risk management is most often called for when political conflicts about the handling of infrequent, high-impact events are at stake. Quite contrary to this tendency, in the financial sector, risk management focuses on frequently occurring events with relatively low monetary impacts. One of the critical institutions for this routine form of risk management is insurance. Although an important institution, insurance is, however, insufficiently researched and largely overlooked in the social sciences. It has even been considered, "a virtually unknown industry," (Meier, 1988: xv). In social science literature, insurance is not unknown as far as risk spreading, contracts, or risk assessment are concerned; they are analysed in great detail. It is a conceptual void that does not allow for systematically bringing together industrial processes, organisational and regulatory features and risk management. In other words, although many aspects of insurance are analysed from political, regulatory, decision-making and economic perspectives, these findings cannot be brought together to paint a comprehensive picture of insurance. Hence, for a better understanding of insurance and its specific forms of risk management, a comprehensive framework needs to be developed.