Ensuring an Underclass: Stigma in Insurance

Abstract

In our country, access to insurance can be a matter of life and death, as well as financial security. Despite these great stakes, the ability to get affordable insurance is often influenced by social factors like sexual orientation, age, gender, and race. Insurers defend these practices, and regulators frequently agree, on the basis of actuarial fairness. That is, some groups are costlier to insure and others shouldn’t have to offset their expenses. This article advances a stigma-based critique to challenge this conception of lawful discrimination and fairness in insurance. The sociological stigma literature tells us that it is a natural social tendency to seek out differences, stereotype, and create underclasses who enjoy less social standing and experience structural and individual discrimination. Applying stigma theory to insurance, actuarial fairness is undermined. Of course some people will be costlier to insure, but we may be incapable of determining this in an unbiased way. Far from being ensconced in scientific objectivity, insurance is influenced by subjective social constructsin ways that produce unfair harms for insurance underclasses. Insurance should be regulated to address and minimize these harms.

Keywords: insurance, social insurance, stigma, health insurance