The main purpose of this book is to document and explain a process of cultural change in the British life insurance industry away from traditional actuarial practices of prudence and profit participation and towards a system of financialized governance that relies on the explicit quantification of financial risk. This task can be subdivided into three components: (1) a description of how life insurers came to organize uncertainty around the explicit quantification of financial risk; (2) an explanation of why financial risk became incorporated into insurers’ evaluation machinery in the way it did; and (3) an examination of the consequences of insurers’ changing evaluation machinery. In this chapter, I outline the theoretical approach I follow to study the process of cultural change and the remaking of the boundaries between British life insurance and the financial sector more generally.

The chapter contains three sections. First, I explain what is meant here by financialization, drawing on the work of Eve Chiapello and colleagues, who, in Weberian spirit, link the evolution of capitalism to the tools and instruments employed to render capital visible, deployable and manageable. Second, I review the social science literature on insurance. This section enables us to see how the insurance logic changes with the appropriation and institutionalization of new financial evaluation practices. Third and finally, I outline the theoretical apparatus that underpins the analysis of how the boundaries between finance and insurance were remade. I draw on, and integrate, three sociological perspectives: the social studies of finance, field theory and the sociology of professions. Drawing together key lessons from each of these perspectives, I suggest that the institutionalization of new quantification practices and the subsequent evolution of British life insurance occurs at the intersection of the power struggles among insurance companies and the competition between different forms of actuarial and financial professional expertise. Readers not interested in sociological theory per se may wish to skip this final section and proceed directly to the empirical chapters.

Financialization and the three ages of financial quantification

Financialization has been a key term for understanding changes in contemporary capitalism (Van der Zwan, 2014; Mader et al, 2021). In generic terms, financialization refers to the process whereby financial logics, motives and actors have become increasingly prevalent in contemporary capitalist societies.