Fantastic, informative article in NYT Magazine takes a peek at ‘cat bonds’ — or catastrophe bonds — and the argument for pricing insurance in accordance with more ‘realistic’ models of risk, for example for hurricanes or disasters. Interesting, compelling, and well-written… I don’t like being so cynical but it almost has one believe that the insurance industry can play a socially useful role in solving the problem of risk mitigation: by encouraging people not to build and live on fault lines or in highly vulnerable hurricane zones — or by pricing insurance sans state subsidy in such a manner as to cover actual losses as opposed to the fantasy losses that the industry, pre-Katrina, historically pre-supposed. All of this sounds great if it didn’t ignore the fact that at a population level those most vulnerable to extreme disasters are to be found in the lower strata of the social class and SES registers. There is also a pretty heavy correlation between race and vulnerability to extreme events.

Just thinking out loud here, but it seems there are at least two parallel discussions going on here in the area of catastrophic insurance: On the one hand are those discussions which focus on the specific techniques and practices around insurance which are introduced and made viable (and visible) in discourse and policy without reference to a number of salient elements such as social class, race, etc. On the other hand, there exist a number of critiques which point almost exclusively to ‘the social’ — to social disadvantage, the reproduction of oppression, and inequalities in a number of domains — to explain the root ’causes’ of disasters (and offer a way forward) without specific reference to the very rationality and techniques which parse the world into (usually predictable) risks and rewards. This is maybe a crude second-order observation to be considered in light of Stephen’s flag of the Kunreuther piece.