Wallace Stevens – what insights does he have into insurance?

I wrote a couple of weeks ago about Franz Kafka – he may be known for his illustrations of the bureaucratic and absurd, but I will forever associate him with insurance. I am still yet to read anything actually written by Kafka, except for essays written in his capacity as a lawyer at the Workmen’s Accident Insurance Institute for the Kingdom of Bohemia in Prague.

It turns out however, there are more insurance executives in literature than I would have expected (although admittedly, I had expected there to be 0).[1] Wallace Stevens: who, incidentally, also sounds like a fun (if belligerent) party guest – he once had a fistfight with Ernest Hemingway (Hemingway won). I have to again admit my relative ignorance of canonical literature – I had never read anything by, let alone heard of, Wallace Stevens before. My justification is that Wallace Stevens was an American poet. I do not read much poetry, and frankly, have read almost no American poetry.[2]

There was a reference to Wallace Stevens in my book of essays by Kafka. And reader, I found out that there was a whole book about Wallace Stevens, his poetry, and his insurance work. Reader, I bought the book. I spent just shy of £55 on an eBook of The Wallace Stevens Case: Law and the Practice of Poetry, by Thomas Grey, a legal theorist.

Kafka may have been de facto CEO of his insurance institute, but Wallace Stevens was a vice-president of the Hartford Accident and Indemnity Company (now “The Hartford”, in the Fortune 500).[3] I am not sure I quite agree with Grey’s assessment that an insurance company vice-presidency is a “grandeeship among the actuaries”. But it was undoubtedly true that Stevens made it to a senior position in one of America’s largest insurance companies (he was one of only 4 VPs of “one of the most important insurance companies in the United States”). Stevens’ speciality was fidelity and surety claims – so much so that he was considered “the dean of surety-claims men in the whole country” and “absolutely the diamond in the tiara” of his company.

Glittering praise for Stevens; clearly an ornament to Hartford – but what on earth are surety claims? That is a very good question. I still do not really understand what fidelity and surety bonds / guarantees / claims are about, and I once wrote a memo on this subject.[4] I think this New Yorker review of a Stevens biography does a great job of summarising what surety and fidelity claims are about: “surety covers defaulted loans and fidelity employee malfeasance”. To add more meat to this:

  • Surety: these involve an obligation from one party (which, if you are getting insurance, would be the insurer) to guarantee the obligations of one party failing to perform their obligations owed to another party. This page has a neat diagram.[5]
  • Fidelity: this is a type of protection for one party for the dishonest / fraudulent act of others – typically taken out by an employer to protect against dishonest acts by its employees.

There are some interesting differences between how Stevens and Kafka understood the world of insurance from an ideological / abstract perspective, probably driven in large part by the different roles they occupied – Kafka worked at a semi-governmental institute, Stevens in a thoroughly private enterprise. Although it is simplification, Kafka’s work – working on and improving the safety and security of workers, both in aid of accident prevention and in terms of ensuring that appropriate insurance schemes / registration was in place in workplaces – was much more aligned with the common worker than Stevens’ work.

Again, the milieu that Stevens concerned himself with in his work at The Hartford likely influenced him. Surety is typically taken out by builders or other commercial enterprises, and fidelity insurance have embedded into it the concept that the employer needs to be protected from the actions of its employees.

This is a fascinating article I saw on JSTOR about the writings of Stevens on insurance (although it does get into issues of symbolism and father-complexes that are somewhat beyond me), although sadly I have not been able to locate Stevens’ underlying articles. So, I caveat the below, as it is based on another’s account of Stevens’ writing.

There is a reference to FDR’s Social Security Act of 1935, and Stevens’ views on centralised insurance. It seems that Stevens compares centralised insurance to “the Sci-Fi machines of H.G. Wells”, such was Stevens’ scepticism of “insurance for all”. Instead, Stevens’ view of perfect insurance is that of “insurance for everything” – where risk is not fully eliminated (which would lead to a dull world), but instead risk is inevitable but prudent players can ensure that they are insured for this risk. In this “insurance for everything” utopia, risk exists everywhere and is not something that can (or should) be eliminated, but instead, that risk can be quantified (in terms of its financial impact on the insured) and hedged against.

Far be it from me to compare myself to Stevens, but like his self-interest in wanting to prevent a slippery slope[6] to fully nationalised insurance, I have some self-interest in terms of insurance being broadened and broadened further to allow more and more exotic and novel risks to be covered. Without going into too much detail, I underwrite a type of insurance that did not exist 2 or so decades ago – no one had thought that this specific type of risk was something that should be subject to insurance, until the turn of the millennium. If people want to get insurance for this risk, rather than trying to mitigate it in other ways outside of insurance, then so much the better for me and my chosen career path!

Let me dive in to another one of Stevens’ articles, a 1938 essay entitled “Surety and Fidelity Claims”. Stevens’ speciality was claims for surety and fidelity, rather than the placement / underwriting process. Insurance is fiddly, and the process of getting your claim paid even more so. I am particularly sad that I did not get to read this essay, as it is a “human interest piece” talking about what it is like to deal with insurance claims. Stevens talks about being “yoked to the letter” (having to review lots of paperwork) and doing a lot of travelling (“You try to do your travelling at night and often do it night after night”).

In that essay, Stevens emphasises how conspicuous the role of the “claims man”[7] is in the claims process. I love this Stevens quote: “Poetry and surety claims aren’t as unlikely a combination as they may seem… There is nothing perfunctory about them, for each case is different”. As one of the JSTOR articles that I read (kindly) notes, there is a “connection between the imagination required to untangle a complex insurance claim and that required for the composition of… poetry”.

I wholeheartedly agree that an insurance claim involves twists and turns of imagination, as tragic as that might sound to admit. Speaking from a slightly different perspective to Stevens’, I think that (in order to bring an insurance claim against an insurer for a policyholder) that winning your claim requires you to tell a story. You have to show that the insurance coverage is engaged (generally, that you have suffered loss from a cause / event that is insured) and that you have suffered loss that is not excluded by the policy. And then you get to arguments about quantum. Those seem like pretty austere arguments, but it takes considerable creativity and finesse to decide how to link together lots of information – sometimes millions of documents, thousands of emails – into a coherent, persuasive thread.

Stevens managed to find some kind of balance between his legal / insurance work, and his poetry – he never properly resigned from The Hartford before he passed away, and (at least according to the source quoted in his Wikipedia article) actually turned down a professorship at Harvard because he did not want to give up his insurance day job. I can only aspire to show as much dedication to excellence in both insurance and literature.

[1] Indeed, the number of insurance executives who were also prominent American poets is not just 1 (Wallace Stevens) – Ted Kooser, the US Poet Laureate from 2004 to 2006, was also a VP (at Lincoln Bankers Life). More on Wallace later, but I also agree with this writer that Kooser seems like a far more laidback personality than Stevens and might be someone I would like to go and have a chat with in a more relaxed (and less fearful) way.

[2] Except Emily Dickinson, which we were mandated to read at school. I just remember the punctuation in her poetry being bizarre, and frankly frustrating, especially when our teacher was guiding us to read huge amounts into the placement of a dash. I would not call myself a linguistic prescriptivist, but seriously – punctuation should be used in a moderately sensible way.

[3] Also, the linguist Whorf (of Sapir-Whorf fame) worked at The Hartford (from 1918 to 1941) at the same time, although there seems to be no evidence that Whorf and Stevens interacted with one another.

[4] To be fair, it was not a very long memo and did not go out to a paying client, so I felt less bad about my relative state of ignorance even after I had finished researching and writing that paper. Still, stressful times.

[5] The hyperlink is obviously not an endorsement of any particular broker or provider of insurance. Just thought I would emphasise that – I chose this link because it was the first hit for me on Google for “surety insurance”.

[6] I am not generally a fan of slippery slope arguments – I think they are a bit cheap – but feel justified in evoking this here, given it is mentioned as a potential concern of the insurance industry of the US in the 1930s more generally.

[7] Nowadays, we would go for something gender neutral here – I have (thankfully) not heard the phrase “claims person”, but you would go for something like “claims handler” nowadays.

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