Session 11: The Price of Risk in History

Thursday, July 21th 2022, 13:45–15:45 (CEST), Room U1, 197

Zoom-Link: | Meeting ID: 665 7555 5654

Session Organisers: Leonardo Caruana (University of Granada), André Straus (Centre national de la recherche scientifique)


Under this title, the theme of this session seeks to open a reflection on the history of risk pricing since the 17th century. It is of course a question of questioning the notion of risk, which must be differentiated from that of uncertainty. If we take up Frank Knight's distinction of 1921, the characteristic of risk is that it can be approximated by mathematical probabilities, which is not the case for uncertainty. This definition is the one that has prevailed among insurers, but it is clear that there is a pre-probabilistic history of the notion of risk. Since people have sought to cover themselves against risks, they have developed techniques that belong to the history of insurance and set up organizations that can implement them. In order for insurance to intervene, in one form or another, it was necessary to define both the insurability of risks and the price of their coverage.

With economic development, particularly industrialization, innovation, both in products and processes, has brought new insurable risks, new in nature and in size, and the development of new formulas to cover them. Over time, on the first point for example, while the boundary between insurable extreme events and systemic risk is clear, it is sometimes difficult to define in practice.

As soon as risks had to be transferred, the question of the price of their coverage arose. It is interesting to ask how this "price of risk" was set, before the probabilistic era and the actuarial era.

At the beginning, the specificity of industrial risk was not clearly perceived. The mutuals therefore continued to charge the same rates for those who insured their homes as for those who wanted to insure their factories. Moreover, insurers had to have the technical knowledge to evaluate the cost of claims that could arise from the implementation of new processes. To this end, they hired experts whose duties included approving plans for new facilities that owners were concerned about insuring, and they began to agree on common rates.

We therefore hope that this session, widely open, raise the history of risk pricing over the last three centuries and discuss the issues associated with it: the role of professional insurance organizations, relations with public authorities, the existence of insurance cycles, etc.

1. Gambling on Claim Frequency. Loss Expectation and the Spread of Risks in the Making of Modern Insurance

  • Alberto Cevolini,Department of Sociology, University of Modena and Reggio Emilia

2. The Price of Risk and the Price of Entrepreneurship

  • Ben Gales, Faculty of Economics and Business, University of Groningen

3. The Price of Risk, Size and Ownership in the Italian Insurance Sector in the Twentieth Century

  • Fabio Lavista, Department of Civilizations and Forms of Knowledge, University of Pisa
  • Giandomenico Piluso, Department of Humanities, University of Turin

4. Price of Risk in Great Risk

  • Leonardo Caruana de la Cagigas, Department of Economics, Theory and History, University of Granada
  • André Straus, CNRS/University Paris I Pantheon Sorbonne