Could Gun Insurance Reduce Gun Violence?

Could Gun Insurance Reduce Gun Violence?

The Second Amendment: “A well-regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms, shall not be infringed.”

Interpreting what the Second Amendment means is up to judges. But it is necessary to read it, to knowingly comment on whether gun insurance could reduce violence in the United States.

For the purposes of this discussion, “gun insurance” would mean a modified personal liability policy, not a gun floater.

Many people love to hunt, and participate in their states’ hunting season. I was taught to hunt with a .22 when I was in grammar school. We had rifles and shotguns and treated them as tools. They were tools that demanded respect. Since I don’t live on a farm and don’t hunt, I’ve seen no reason to own a gun. Although, we have a raccoon living in a large maple located less than ten feet away from our deck. I think we need protection should a rabid raccoon, or skunk, come into our yard. 

When I started to research the question of gun insurance, I expected to find a reasoned argument. I was surprised and dismayed to find mainly highly emotional and irrational responses.

I believe that requiring that a person present proof of “gun insurance” to purchase a gun would have a positive impact.

The proponents of such a law seem to have reasonable goals:

1.)   Reduce gun violence by keeping guns out of the hands of those who fit the profile of mass shooters.

2.)   Create a funding mechanism to compensate the family of victims and victims of gun violence.

3.)   Encourage cautious/safe gun ownership.

4.)   Assign a larger share of the cost of gun violence to gun owners.

Given these goals, we would need to make changes in standard insurance contracts, to make this program effective. Most contracts do not pay for intentional acts, which could easily be modified, for this program.

This modification would not involve a huge change in insurance industry thinking. The life insurance industry has for many years paid death benefits for suicides. Most life policies have a one or two-year period after the policy is purchased during which a suicidal death would result in no payment.

Covering intentional acts is often said to be against public’s good, but it would not be, as there is no chance for unjust enrichment.

Further, it would be a stretch of fantasy to think the average mass shooter is going to care whether or not they have insurance.

Gun violence and the use of guns in criminal acts for nothing new. In today’s world, the average mass shooter is a male with an arsenal of weapons. They are seemingly motivated by revenge or anger, which is why so many shootings take place at a location of rejections, such as a school or a workplace. The shooters have a history of abuse, a self-centeredness, and lack of compassion. They have low self-esteem and hang out with an outcast group. They often are heavily obsessed with violent games or movies.

Did you know that there have been over 10,000 gun violence deaths so far in 2015? There are hundreds of millions of firearms owned by individuals in the United States. Of course, many of these individuals only use their guns for hunting or collecting, but others have more sinister motives.

It is obvious that not all males who love guns, action movies and bloody games are going to become mass shooters. It is further obvious that not every unfeeling, abusive person is going to becoming homicidal, even if they have suffered immense rejection.

However, certain attributes of a low credit score have become proxy variables that allow auto insurance underwriters to predict loss outcome. Likewise, I’m certain the insurance industry would quickly discover logarithms to predict high probability of loss for “gun insurance”.

The insurance industry responds to the profit motive. It’s search for profit would seemingly ignore the political quagmire at the heart of the gun debate. Every two, or four, years we’re shown pictures of political candidates dressed in camo that still has the tags. They’re awkwardly carrying guns in an effort to impress us with their love of hunting. Can we expect a political solution to gun violence from people who masquerade as Elmer Fudd?

It’s time to turn over a portion of the gun violence prevention to private industry.

In practicality, the cost for “gun insurance” for the average person would be quite low. However, if the insurer were to think there was a causal relationship it could charge more for an owner an assault rifle than for a .22. Someone who wants to “open carry” might pay more than a person who keeps the guns under lock and key in his home. As the person moves in approximation toward the profile of a mass shooter, which I’ve outlined above, the cost would go up, substantially.

Psychologists have stated that it is almost impossible to predict who will become a mass shooter. It would seem horribly inefficient and an affront to our freedom to turn psychologist loose with the right to prevent people from gun ownership based on their opinion.

However, if a person’s profile is such that they are part of what has been proven to be homicidal, they would pay much more for “gun insurance” and thus would be deterred.  Possibly the process could include a screening mechanism to identify problem individuals in need of help.

Some set the annual cost of gun violence in the United States at $229 billion. That’s $1,000 a year for every person in the United States. An accurate count of gun owners doesn’t exist, but I would guestimate there are about 100 million gun owners in the United States based on what data I could find.

If we based the insurance premium at a total cost of about $35 million for a reasonable program the premium that addresses a tenth of the cost associated with gun violence, premiums would run between $175 and $2,000 annually. Mandatory insurance, with statutory coverage, would be an ideal commodity for internet sales, which would drive down the margin and could reduce the premium substantially.

Presently, about sixteen percent of motorists are uninsured, despite laws requiring insurance. Enforcement of these laws is almost non-existent. When the law is enforced, the number of uninsured vehicles goes down.  That is why uninsured vehicles are as low as one percent in Massachusetts and as high as twenty-nine percent in New Mexico.

It would be possible to make it mandatory for a person to present proof of insurance to buy a gun. This would place the burden of policing the existence of insurance on the gun-sellers.

The policy would pay according to a preset schedule, much like worker’s compensation, which would be set statutorily. Receiving payment under this policy would not prevent victims from seeking normal compensation through civil action.

This law probably wouldn’t keep guns out of the hands of determined criminals. It probably would reduce the number of guns purchased by the mentally ill.

Some have suggested that insurers would have trouble establishing rates for this exposure. Having once been a senior excess and surplus lines underwriter and a Lloyd’s of London correspondent, I find that assumption highly unlikely. Many unique and hard-to-place risks are underwritten with minimal empirical data. There exists a virtual tsunami of gun data against which reasonable assumptions can be made. The NRA markets “self-defense insurance” to cover civil and criminal defense, bodily injury and property damage should you be involved in an act of self-defense.

The policy would need exclusions and restrictions to mitigate the fraud exposure.

The federal government could act as a catastrophe reinsurer for the first few years until establishing correct rates becomes less of a problem. I doubt many private insurers would feel they need such a back-stop and would elect not to pay FDIC-like premiums for that cover.

While I agree the passage of such a bill in Congress is highly unlikely, I do think discussion of such a bill serves a purpose.

Other Enhance Insurance articles related to “special” Home Insurance:

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Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.

While the majority of people want an agent involved in their purchase of insurance, many people want to see if they can save money by buying direct from the insurance company. Others want to try a direct quote to make sure the premium they’re now paying through their local agent is fair. If you want a quote for your coverage, click on the competitive quote button on the right side of this page.

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Jim operates an insurance agent network called Insurance Partners, aggregating agents in the Midwest for over 25 years. He was National Agent of the Year for Metropolitan in 1993 and Midwest Agent of the Year for Travelers in 2011. He served as a founding board member of the Surplus Lines Association of Minnesota.

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