It’s hard to get thoughtful responses to the ideas published on this blog. Most comments are from people who simply assert their, usually negative, conclusions. When I get a response such as The Truth About Maryland’s recent post “Mandatory gun insurance: an interesting smart idea that won’t really work. A primer, from a finance and insurance geek,” I welcome the chance to look for new information or approaches to the problem of dealing with gun deaths and injuries. Insurance is a tool and gun injuries are a problem that to be addressed by that tool require that it be specifically adapted to the problem. For example, the parallels between automobiles and guns are striking because both are widely used instrumentalities that result in a substantial amount of death and injury; but this blog outlines differences in the best implementations of insurance.
Amar Kaleka is a candidate for Congress from Wisconsin running for the seat now occupied by Paul Ryan. He is the son of one of the persons killed by a Neo Nazi white extremist at the Sikh Temple in Oak Creek Wisconsin on August 5, 2012. He has gun safety as a key issue in his platform. Of particular interest to this blog is the third point on the “American Peace Plan for Gun Responsibility.”
3. Mandatory accidental discharge insurance on all gun sales and ammo. When there is an accidental discharge and someone is harmed or victimized by an irresponsible gun owner, the burden of fiscal responsibility is left in limbo. Private insurance carriers have the ability to determine the gun buyer’s biography, health, and criminal record. Insurance companies and the market would decide reasonable premiums based on the type of gun purchased, carrying in public, or what type of training or the expertise of the gun owner. The Federal government does not have this ability.
The announcement was made on August 30, 2014 in Santa Monica, CA with Richard Martinez, father of 2014 Santa Barbara shooting victim Christopher Michaels-Martinez; and Patricia Maisch, survivor of the 2011 Tucson, Arizona shooting. It was picked up by Insurance News Net.
Limiting the mandate to accidental discharge makes the coverage much more narrow than the insurance advocated by this blog, but it is in line with many plans introduced in several states. The argument that any insurance will cause insurers to take an interest in gun owners level of responsibility is probably a reasonable start. The actual number of cases that insurers would have to pay would be small enough that it would end up being a very affordable coverage and is probably already covered by most homeowners insurance.
The fact that mandatory (but not so easily voluntary) insurance can cover intentional and criminal acts is not recognized; but in light of the widespread disinformation spread by insurers, it can be handled more effectively in full legislative hearing process than in an election campaign.
The point that insurers can do evaluations that the Federal government cannot is a good one. The “Top Down” system advocated by this blog is based on that idea with a method of guaranteeing insurance for all guns without general governmental gun registration.
Gun Insurance Blog salutes Amar Kaleka for his courage and foresight in placing gun insurance in his platform in a clear and open manner.
This post is a good place to start if you’re new to this blog. Scan the questions and follow the ‘Related:’ link(s) if you have an interest in a particular area. You may also want to check the category’s listed in the right hand column.
Q: What is the purpose of mandating gun insurance?
Required insurance for guns or gun owners should be designed to provide benefits for victims of gun accidents or violence. Insurers will automatically take appropriate steps to encourage gun safety as part of their loss control and underwriting activities.
Q: What specifically would be the best insurance system for guns?
Each state should adopt a system of no-fault insurance with a system of delivering medical and cash benefits directly to victims. This insurance should be required to be in place for any firearm brought into or kept in the state in order for that firearm to be legal. It should provide all of the benefits available to victims of motor vehicle or workplace injuries.
In a new article published Sept. 20, 2013 on the Forbes website and titled “Five Reasons Why Gun Insurance Can Survive Political Indifference”, he advocated for insurance as the most effective and practical solution to gun violence in more detail than ever before. Wasik is a pioneer in pointing out the need for gun insurance starting well before the tragic incident at Sandy Hook. His prior articles include:
February 15, 2011 in Reuters: “Why gun insurance should be mandatory”
December 17, 2012: “Newtown’s New Reality: Using Liability Insurance to Reduce Gun Deaths”
December 29, 2012: “Gun Liability Insurance: Still a Viable Proposal”
April 4, 2013: “Gun Insurance: An Economic Argument”
His five reasons are:
1. Liability Coverage Addresses the Issue of Potential Future Harm Better than Any Gun-Control Legislation.
This is hot stuff!! A very heartening reminder that the drive to establish a responsible gun policy in our country is here to the finish.
A pair of important OP/ED’s to hold gun manufacturers responsible for the injuries they create has been published in the New York Times. The first “Make Gun Companies Pay Blood Money” by Lucinda M. Finley and John G. Culhane advocates a compensation fund to pay victims of gun violence financed by a tax on gun manufacturers or importers. The second “Let Shooting Victims Sue” by Robert M. Morgenthau calls for rolling back the special laws that protect gun manufacturers and others in the gun trade from liability for the damage their wares create.
Make Gun Companies Pay Blood Money
The insurance industry through its trade group spokespersons has been very negative on the possibilities of dealing with the gun violence problem by means of requiring insurance. The legislative proposals made so far have all been very narrow calls for conventional liability insurance sometimes with high limits. The trade groups have been quick to jump on the limitations of that approach and on projected difficulties with implementation. The quotes in various new articles have been very hostile to gun (and actually all) insurance.
In a statement made to the Connecticut State Legislature on March 19, 2013 the Property Casualty Insurers Association of America (PCI) made a more carefully worded opposition to such insurance. This allows an analysis of the reasons for the reservations of the insurance industry on this matter.
PCI opposes this legislation because it will be ineffective in curbing gun violence and will create significant burdens for law abiding gun owners and insurers. As a general rule, PCI opposes mandating the purchase of liability insurance. We have found that mandatory insurance requirements are often ineffective and serve only to add enforcement and administrative costs for both government entities and insurers.
The comparison with motor vehicle insurance is relevant here in showing that this is a ridiculous statement. While it varies greatly from state to state, in many states motor vehicle insurance is mandatory, enforced and highly effective in compensating injured persons. In states where it is not effective, it is because insufficient insurance is mandated or enforced.
In a opinion article on Property Casualty 360 titled “Major Misfire” Paul Tetrault, state and policy affairs counsel for NAMIC, denounced the move in seven states and Congress to require insurance on guns. He repeated the statements that insurance cannot cover intentional acts. This blog has several times published numerous examples of current insurance that does cover intentional and even criminal acts to the benefit of parties other than the person who does the acts. This was pointed out to NAMIC but their spokesperson emailed that the organization stands behind the article.
A new post by Julia Hartman on the PreventingNewtown blog titled “A Case for Gun Liability Insurance” gives a thoughtful and interesting discussion of the benefits of requiring insurance to protect victims of gun violence.
The post gives a moving presentation of the damage done daily by guns and calls for insurance as a way to deal with the problem. It makes the comparison to motor vehicles and points out the fact that gun deaths exceed motor vehicle deaths in 10 states currently. Suicides are handled on a par with homicides and accidents, an position which is often opposed by those supporting the status quo for gun policy.
An article in Bloomberg by Elizabeth Bunn titled “U.S. Insurers Resist Push to Make Gun Owners Get Coverage” has been picked up by various sites on the web. The American Insurance Association, a property-casualty trade association is quoted as saying that gun insurance could have an effect of more gun violence by owners who have less at stake and that “Property and casualty insurance does not and cannot cover gun crimes.” They must be talking about current liability insurance which is written for the benefit of the first party insurance (and gun) owners. They also quote Bob Hartwig president of the Insurance Information Institute as saying “Insurers will not insure illegal acts.”
Insurance which is required for the benefit of third parties injured by some kind of activity often works differently. For example, if in some incident of road rage an insured person intentionally smashes into your car can you collect from his (probably not her) insurance? It varies from state to state. In Texas you can’t, in Massachusetts you can as decided in Cannon v. Commerce Insurance Company, 18 Mass. App. Ct. 984 (1984). In other states there has not been any court decision on the matter and it may depend on the details of language concerning who is an insured party.
In many business situations an intentional act on the part of one insured (often an employee) may create a liability on the part of another insured (the business or corporation itself). Businesses want to protect against such situations and insist that insurers put a “separation of interests” clause in the insurance contract. For an example of a court decision applying that to intentional acts see Minkler v. Safeco Insurance Company of America, (Cal. Sup. Ct., S174016, June 16, 2010). The effect of this is to treat each insured party separately so the the business is insured even if the employee has done an illegal and intentional act which cannot be insured for the employees benefit because of a doctrine of public policy. A more wide ranging example might be a performance bond taken out by a construction company for the benefit of their customer. It protects the customer even if the contractor cheats and steals funds.
The point is that insurance to protect victims of gun violence can and should be structured for that purpose. The model of first party liability insurance is not very good here. No-Fault insurance is a better model. It’s not necessary to have all the characteristics of No-Fault such as the victim’s insurance(if any) paying first, but that would be OK. The use of a pool to cover unknown or uninsured gun owners is very desirable. The one in use many No-Fault states would work for guns.
The proposed laws in various states, most recently in NY, which would mandate liability insurance as a condition of having a gun license do not give details in the type of insurance required other than “liability” and a specified limit. It’s probably for this reason that the Insurance Industry is not yet taking the possibility of requiring insurance to protect victims of gun violence seriously. The insurance industry has found a way to help with almost any risk in the past, except perhaps for flood insurance which would also be possible if universally mandated. There are many published lists of “Principles of Insurability.” Gun insurance measures up well to them. In particular, a general requirement for such insurance will prevent adverse selection. Bob Hartwig also stated “they can’t require companies to offer that coverage.” Insurance companies require a suitable market and insurance structure to provide coverage. That is quite possible for gun insurance. The insurance industry needs to be a part of designing that structure, so far they have not engaged.