by Paul Stevens
Published in Faith in Business Quarterly, 8:3 pp. 3-6.
Insurance is a means by which individuals, families, businesses and other organisations reduce or eliminate financial uncertainties in areas of life where there are predictable possibilities of financial loss. A small but predictable amount of money (the premium) is exchanged for a larger, uncertain, loss. Because the insurer can predict average losses over a large population, the risk is evened out and shared. The fortunate many who escape major loss help the unfortunate few who experience it. Kinds of insurance normally purchased by individuals include life, fire, theft and damage to personal property, legal liability, disability, unemployment, health and travel insurance.
The Insuring of Almost Everything and Everyone
Some of these forms of insurance are purchased by individuals, some as groups (often one’s employer), and some provided, especially in Canada and other countries with a social welfare system, by government or state agencies and paid for, in full or in part, through taxes. This last (insurance provided by the state) insurance is compulsory rather than voluntary.
In addition to insurance that protects individuals (and by extension, their families), corporations, nonprofit agencies and governments undertake insurance for the safe transport of goods, for the reliability of monies deposited in banks, for loans undertaken by governments because of the risk of nonpayment, and for major assets that can be destroyed or lost. It is not obvious to the person or organisations purchasing insurance that many significant risks cannot be reduced through insurance: war and insurrection, nuclear holocaust, ecological disaster (acts of humankind widely and over time) and natural disasters of colossal proportion (commonly called “acts of God”).
In the Western world many individuals pay out a significant percentage of their income in various forms of insurance, – in excess of ten percent in many cases, if compulsory insurance provided by taxation is also considered. Some people complain of being “insurance poor” – spending so much to cover potential losses in the future that they have not enough properly to live today. Others are under-insured and face a threatening future without either personal assets or a social network to cover major losses or reverses. In most developing countries individual insurance is the privilege of the rich and powerful; the poor and middle class rely on the age old securities of family and church.
Significantly, before there was a major insurance industry, the church took pioneering leadership in establishing burial societies (during times of plague), mutual aid societies (with special reference to the poor, widows and orphans), providing hospitality and asylum to fugitives, travellers, and shipwrecked seamen, and setting up the first hospitals for the sick. This is a stunning and little-told story .
Is insurance a mere modern invention to satisfy an artificially induced need in the consumer society? Is there a biblical foundation for buying and selling insurance? When does protecting against risk become a refusal to trust God?
The History of Insurance
While widespread provision of insurance is a relatively modern affair, the idea of insurance has a long history dating back to ancient Babylon many centuries before Christ. Marine insurance was the first, covering potential losses by traders and merchants who had to borrow funds from their suppliers to finance their trade and put up their ships as collateral.
Formal contracts were drawn up by which suppliers agreed to cancel the loan if the merchant was robbed of his goods in exchange for a premium paid. This was formalised in the Code of Hammurabi (1728-1686 BC). The Greeks, Hindus and Romans borrowed some of these codified arrangements and adapted them.
Life and health insurance had its beginnings in ancient Greece (600 BC) and it became part of the benefits of belonging to guilds and trade associations, the precursors of modern unions. The first insurance contract was signed in Genoa in 1347 and the first life insurance with “insurable interest” (1430 AD) concerned the lives of pregnant wives and slaves. England developed “Friendly Societies” to insure industrial workers, and the Great Fire of London (1666) propelled the fire insurance industry forward.
Lacking solid actuarial research and administrative know-how, many fledgling attempts to provide insurance folded, including some early attempts to establish insurance companies in the North American colonies. After the first permanent life insurance company was formed in the USA (1759), there followed health insurance (1847), automobile (1898) and organisations insuring staff for the cost of hospital treatment (1936). Some of these companies were and are mutually owned by the insured; others operate as corporations with shareholders. Major factors in the evolution of multi-faceted and near universal insurance in the Western world are: industrialisation (with its hazards for injury and loss), urbanisation (with its attendant risk of theft), mobility (with the loss of a stable family support group and land that can be worked), and privatisation (with the reduction of society to the autonomous individual).
Thinking about Risk
At first glance the Bible seems to advise not thinking about future risks. The birds and lilies do not worry, “yet your heavenly Father feeds them” (Matt 6:26). It is the unbelieving Gentiles who run after all these things (food and clothing). But Jesus is not condemning planning so much as warning us not to be anxious: “Do not worry about tomorrow, for tomorrow will worry about itself ”(6:34). We cannot add a day to our life by worrying; probably we will do the reverse. Indeed the way we respond to risk is a significant thermometer of our faith and spirituality.
Insurance does not deal with all risks, and perhaps not even the most important risks, such as losing friendships, personal worth, love, hope and faith. No one through buying insurance can guarantee long life, good health, satisfying work, personal contentment, a happy marriage, good neighbours, intimate friendships, and children that bring joy to your heart. On a grand scale we cannot insure against the breakdown of a whole society or the eco-system (though there is much we can do to prevent these). There is no insurance that can be purchased against marriage failure, loss of meaning, personal suffering or most crucial of all, our eternal salvation.
There are several ways of coping with risk: ignoring it, assuming (or retaining) it, eliminating the possibility of loss, transferring the loss to someone else, and anticipating the loss and planning toward it. As regards the first two options:. it is folly to ignore risk, a game of let’s pretend that is bound to catch up disastrously with reality some day.. The most important risks and the most crucial potential losses, we must assume or retain. For the Christian this means trusting in God’s providential care, believing that even temporary reverses will be transformed into general good, as exemplified by the victory of the cross of Jesus. By retaining or assuming these non-insurable risks we are called not only to trust God but to exercise faithful stewardship of our lives, marriages, homes, driving, possessions and ultimately the environment. God is the ultimate owner of everything; what we render is stewardship or regency. So the proper management of our lives is intended to reduce risk. Keeping a car in good repair, for example, is assuming the risk and managing it by good stewardship.
In most cases the third option, eliminating the possibility of loss, is possible only by refusing to accept the adventure of life. Driving a car, travelling, investing our talents in a community, getting married, having children, and even joining a church, are risky enterprises. Tragically some people are like the man with one talent in Jesus’ parable (Matt 25:24-25), protecting themselves against any possible loss and so losing what they thought they had. People who refuse to invest themselves in order to eliminate all possible losses end up losing something more precious than what they protected – the joy of life.
Transferring risk to someone else, the fourth option, is not something we can normally do with risks that we must personally undertake. But this is an acceptable way of coping with some potential financial losses that could ruin one’s business in a single stroke. For example, a surety bond guaranteeing the completion of a building according to written specifications, transfers the risk from the person building the structure to the insurer. Such ways of managing risk are called for in a society that is not merely composed of a collection of individual farmers or tradespeople but corporations and powerful structures.
The most common way to manage risk is to share it through buying insurance. Most insurance is simply a form of mutual neighbour love expressed impersonally without knowing who our neighbours are. Those who may suffer loss become our symbolic neighbours through the agency of the insurance company. Through their knowledge of past experience, by careful prediction of future possibilities, and by accumulating funds over a wide population base, insurance companies are able to cover the enormous losses of a few and the minor losses of the many and have enough left over to cover their operating costs and make a legitimate profit for the shareholders.
What might it then mean to insure prayerfully and Christianly?
First, in many cases it is unloving not to take out some insurance as it may force one’s family to embrace involuntary poverty to care for you in a time of extreme need. Wisely insuring is a form of neighbour-love and part of our stewardship. But one must be careful that the companies trusted with funds are reliable as there are many cases of bankruptcy. There are organisations that rate insurance companies for their strength, liquidity and solvency. Advertised reliability is not a sufficient guide.
Second, our eyes can all too easily be diverted from the uninsurable risks that are much more deserving of our stewardship and prayerful attention: marriages, self-esteem of children, friendships, and the joy of our salvation.
Third, buying insurance must never be an alternative to trusting God. An advertisement for an insurance company boasted “A promise I’m forever watching out for you.” Only God can do that. As Jesus said, our heavenly Father knows what we need and cares for us. Even more, we have an exuberant, risk-taking God who wants his creatures to experience life as an adventure. Significantly, the problem of the fearful investor in the parable of the talents (Matt 25:24) was not his analysis of a potential loss but his conception of God as one who could not be trusted with his mistakes and reverses.
Fourth, risk and loss are now systemic problems, not merely matters of personal character and integrity. For example, the Scriptures warning against idleness assume that unemployed people are lazy whereas today the unemployed are often victimised by systemic problems, sometimes through economies half way around the world. So coping with risk today (insofar as one can) entails cultural and organisational as well as personal stewardship. We must fight against the abuse of unemployment and health insurance schemes if they are government funded and abused. We need to lobby for legislative change to care for disadvantaged and marginalised people in our society.
Fifth, it is just as foolish to become “insurance poor” as to ignore insurable risks. We are meant to enjoy life and to thrive, not to live cramped lives. Often, insurance can be reduced or not even purchased (as in the case of comprehesive insurance on a car) if one has put aside savings that can be used in the eventuality of a sustainable loss. Very valuable possessions (perhaps some that were given through an inheritance rather than purchased) may be too expensive to insure, and wise management combined with “holding things lightly” are more prudent than covering every eventuality. Simpler living is a matter of perspective and not just the amount of possessions. A wise philosophy is to selfinsure for small problems and use an insurance company’s money for large ones. For example, when looking at disability insurance, we should choose a longer waiting period (90-120 days) so that in the event of disability you can use your own resources for the short term, thereby reducing the cost. Some people recommend as a rule of thumb purchasing ten times one’s income in life insurance.
Sixth, it is lamentable that the basic unit of Western society has become the isolated individual covering all his or her potential losses rather than the family looking after one another. Insuring everything one can may, inadvertently, assist in the dissolution of the one organic community, besides the church, that can provide care and support during times of crisis and loss. Families can agree together what risks they will undertake together, including care of people when they are sick or old. Jesus roundly condemned the Pharisees for neglecting their responsibilities to their parents, a form of “honouring” them (Exod20:12) by dedicating their assets to “the Lord’s work,” a system called Corban (Matt 15:3-6). Paul says that if we do not care for our own families we are worse than unbelievers (1 Tim 5:8).
Finally, the church has an important role to play as the equaliser of risk. In the earliest church in Jerusalem, people sold their surplus goods to provide for anyone in need (Acts 2:44-45; 4:32-37). Other forms of economic sharing such as famine relief (11:27-30), occupational sharing (Aquila and Priscilla with Paul in making tents) and mutual aid gift/giving (the great love gift from the Gentile church -1 Cor 16:2; 2 Cor 8-9) were developed later. It is all too easy to claim it would never work in our urbanised, mobile society where most people move every four or five years. But a commitment to a house church or an intentional community, or sometimes a radical commitment not to move – although counter-cultural – may be a concrete step towards true community. We have something to learn from churches in the developing world in this area. When someone dies in Kenya the church gathers to make gifts to the family and not just the grieving spouse, to provide a living and a future for the survivors.
Like most “advances” in the Western world, the growth of the insurance industry is a mixed blessing. With careful management, reaffirming the providence of God, and wise stewardship of our lives, buying some insurance can be an act of neighbour love and personal responsibility, doing what we can not to be a burden on others (1 Thess 4:12; 2 Thess 3:8). In reality, we can never eliminate that possibility fully. And where true family and church community exist, mutual caring is not a burden but part of the unlimited liability of family love. The temptation of too much insurance, or a wrong attitude, can lead to an illusory feeling that we can control our own futures and live autonomously without God. Like many facets of everyday life this one too calls us to a life of prayer, spiritual discernment and loving action.
R. Paul Stevens is David J. Brown Family Professor of Marketplace Theology and Leadership at Regent College, Vancouver. This is a slightly adapted version of his article on “Insurance” in The Complete Book of Everyday Christianity (edited by Stevens with Robert Banks, IVP, 1997).
References and Resources
James L. Athearn. Risk and Insurance (St. Paul: West Publ., 1981).
Kenneth Black, Jr., “Insurance,” in The Encyclopedia Americana (Danbury, Conn.: Grolier Inc., 1989), Vol 15: 233-239.
Kenneth Black, Jr., and S. S. Huebner, .Life Insurance (Englewood Cliffs: Prentice-Hall, 1982).
E.H. Oliver.,The Social Achievements of the Christian Church (Toronto: The United Church of Canada, 1930).
N. A. Williams.Insurance (Cincinnati South- Western Publications, 1984).