Making a market for acts of God

How is the damage of major global disasters paid for? And who by? Dr Rebecca Bednarek, Senior Lecturer in Management at Birkbeck, explores this in new book Making a Market for Acts of God, now available from Oxford University Press. 

acts-of-god

Catastrophic events appear to be increasing in both frequency and severity globally. The financial cost of their losses can be sudden and huge – but who pays the insurance bill for such massive events? Who paid for Hurricane Katrina, or 9/11, or the 2011 Tohuku earthquake?

It all comes from the ‘Reinsurance’ industry – a financial market that trades in the risk of major disasters. This means reinsurance is a crucial social and economic safety net that helps to mitigate some of the effects of disasters, both financially and in terms of allowing for a swifter rebuilding of people’s day-to-day lives following destruction or damage. Dr Rebecca Bednarek, Senior Lecturer in Management at Birkbeck uncovers the everyday realities of the reinsurance market in her book, Making a Market for Acts of God, co-authored with Professor Paula Jarzabiwski and Dr Paul Spee. They get to the bottom of how the risk of such disasters can be calculated and traded in a global market.

rebecca-bednarek_photoIn a recent interview for BBC Radio 4’s programme Thinking Allowed, Bednarek explains: ‘In the reinsurance industry, the increase and frequency of weather related events are put in the context of climate change. In addition, what is also happening is increased urbanisation; as cities get bigger, the losses and expenses of these events become more expensive, as more people are insured in localised settings.’ Further, increasingly, a natural disaster in one country could affect significant losses to supply chains in businesses around the world, and it is against this backdrop of increased globalisation that we must attach more significance to understanding the market of reinsurance.

The sheer scale of the claims means risk must be spread further in order to mitigate its effects – the attacks on the World Trade Centre in 2001 insured losses of $35.5 billion, for example, and for Hurricane Katrina in 2005 the payout was $46 billion. But as Bednarek says: ‘It’s not just the scale of this loss, it’s the fact that you couldn’t predict them. The reason reinsurers are able to themselves survive and to weather such large claims is because for each individual insurance deal, multiple reinsurers take a small part of this deal. No one reinsurer is exposed themselves to a single risk.’ The book also explains how long-term trust-based relationships between insurers and reinsurers are crucial to enabling and stabilising capital flows before and following these large-scale events. These relationships also enable reinsurers to build up deep contextual knowledge of specific risks; something which remains crucial in informing their judgement about risk even as they also use highly technical vendor models and actuarial techniques.

acts-of-god-book-cover

Bednarek and her co-authors shadowed underwriters from various different countries for over three years, gathering ethnographic observations from reinsurers in Bermuda, Lloyd’s of London, Continental Europe and South East Asia, studying their trading activities across many disaster situations.

There may be some developments in the reinsurance industry which could cause future problems, however. Bednarek says: ‘What we found was a whole milieu of long-standing social practices that had ensured that this industry had worked’ and provided capital to underpin large scale catastrophes for centuries. However towards the end of their period of engagement, the researchers began to observe ‘a period of rapid change; things like collatorised forms of finance, different kinds of deals that were changing the industry in certain ways. We wonder what these changes might do to some of these long existing practices that we identified as integral to this market and how it works.’

. Reply . Category: Business Economics and Informatics . Tags: , , , , , ,

Handbook on Gender and Health

This post was contributed by Dr Jasmine Gideon, senior lecturer in Development Studies at Birkbeck’s Department of Geography, Environment and Development Studies. Here, Dr Gideon offers an insight into her new book: The Handbook on Gender and Health

My monograph ‘Gender, Globalization and Health in a Latin American Context’ develops the idea of a gendered political economy of health and uses this framework to consider health reform in Chile. Compiling the Handbook on Gender and Health offered me an opportunity to develop my ideas further through directly engaging with a wide range of

Dr Gideon's book cover features an piece by Gambian artist Suelle Nachif titled 'Faj' ('heal')

Dr Gideon’s book cover features a piece by Gambian artist Suelle Nachif titled ‘Faj’ (‘heal’)

academics and policy makers working in this area.

The Handbook offered an opportunity to highlight empirical examples from across the globe and draw attention to case study analysis of specific issues that I was not able to include in my own book. Working on the Handbook was also a chance to think about what my ‘dream team’ of authors would look like and bring together a wide range of writers working on a variety of health-related issues, ranging from the historical development of health systems and how women and men are located within this to more ‘contemporary’ debates around migration, climate change and low paid labour which all have critical implications for health, particularly when viewed through a gender lens.

The Handbook brings together a wide range of disciplinary perspectives to consider four overarching themes, all constituting distinct but over-lapping elements of a broader gendered political economy of health. These are:

Gender equity vs gender equality

The first theme is the tension between ideas of gender equity and gender equality and how these translate in practice when applied to the health sector. Chapters explore the difference between ‘reductionist’ approaches where categories of women and men are not sufficiently explored, for example by failing to address how other axes of inequality (e.g. race/age/ class) can affect people’s ability to engage with health systems. In contrast a gender equality approach seeks to promote gender justice.

According to UN Women (2010), this entails ending the inequalities between women and men that are produced and reproduced in the family, the community, the market and the state. However, at the same time it requires that mainstream institutions are more accountable and transparent and points to the second theme discussed in the book.

Dr Jasmine Gideon

Dr Jasmine Gideon

The gendered nature of health systems

Several of the chapters reflect on the need to uncover the gendered nature of the health system itself and shed light on the diverse ways in which women’s interests are frequently marginalised or health policies work to reinforce women’s gendered roles and responsibilities.

Including marginalised voices

The third theme that is examined is the importance of incorporating the voices of excluded groups in policy processes as several chapters highlight the health costs of failing to engage with marginalised sectors of society.

Challenging ‘one size fits all’

Finally the fourth theme that emerges from a number of the chapters is the importance of appropriate policy responses and a move away from the ‘one size fits all’ approach, often espoused by international donors and global health discourses.

Within the Handbook authors from the Global North and South highlight how many of these challenges have wider relevance to all of our lives and that ‘gender’ remains central to any analysis of health, regardless of the level of development within the health system or wider economy.

Find out more

. Reply . Category: Categories, Social Sciences History and Philosophy . Tags: , , , ,