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.
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.
On Jan 26, 2013 according to the Pennsylvania State Police 50 guns were stolen from the Taylor and Robbins Gun shop which had been closed for about six years but still had old stock on the location. Two burglers broke in and escaped in a vehicle.
Nearly all of the guns that are in illegal hands or used in crimes in the United States started out as legal guns and by some means passed out of the control of their legal owners. Many of these are due to purchases by straw buyers acting for an inelegible person but many others are due to loss or theft. If an insurance company was still responsible for these guns, it’s very unlikely that they would remain for six years in such a vulnerable situation.
We’re not taking guns seriously in this country, insurance is a big step to becoming responsible.
An article, “Gun used to kill N.Y. cop came from Virginia” published 1-26-13 in the Virginian-Pilot illustrates the kind of gun leakage from legal to illegal hands that insurance could discourage. Colleen Long writes that a robbery in 2011 resulted in the death of a New York City police officer, who was shot in the head. As our system for tracing guns that turn up in crimes relies on records kept by federal licensed dealers, the 9mm semi-automatic Ruger pistol was found to be sold legally in 1999 by a dealer in Colonial Heights, Va.
The buyer of the gun in that legal transaction said that the gun was in possessions he had packed but had ended up abandoning, when he was evicted from an apartment. The story linked above is interesting with more details.
One obvious question is, do we believe the story about the loss of the gun? A Ruger 9mm is not an especially valuable gun. According to firearmspriceguide.com a used one is worth about $200 to $400 depending on condition. A person being evicted may very well abandon a lot of stuff, so it could be true. But the gun did drop into illegal hands and end up in New York. If an insurance company had responsibility for for that gun that continued after it was lost, that insurer would have a strong incentive to require the owner to keep control of the gun. The value of the gun itself was not sufficient motive.
The laws of the State of New York couldn’t stop the gun from being illegally brought from Virginia. The laws of Virginia don’t insure that owner keep track of guns in a way that prevents their loss, illegal sale or abandonment. An insurance company on the hook would, no doubt, require the owner to periodically demonstrate that the gun was still under control. There would be some financial committment on the part of the owner, sufficient to convince the insurer that the gun would stay in legal hands.
This story is special because the victim was a police officer, which provided the motivation for tracing the gun and for the paper writing about it. Thousand of other killings with illegal guns are similar in many ways. As the article says 85% of the illegal guns in New York come from out of state.
There is a nice article “Even with health insurance, medical bills can mount for shooting victims,” on InsuranceQuotes.com by Lisa Shidler. It talks about the $2.4 million for treating the people wounded in the Gabrielle Giffords incident and a number of other subjects. Actually, after negotiations with insurance companies the amount to be paid will be reduced to an estimated $565,000 or $43,462 for each of the 13 wounded persons.
The article links to the Pacific Institute for Research and Evaluation which has a table of costs for gun violence which gives a lot of interesting figures. Of interest to this blog is the average medical cost $49,947 for the medical expenses of each hospital admitted non-fatally injured person. Costs are much lower, $1,146, for persons treated in the ER only. It also gives total medical costs for firearm injuries at $2.88 Billion for 2010 of which almost exactly one half is paid by Medicare or Medicaid. To put it into scale, the total medical costs for firearm injuries is about $10.00 per year for each of the 270 million guns in private hands in the US.
Loss of worktime, which is covered by Personal Injury Protection for motor vehicles in most no-fault states, is about twice as much as the direct medical costs.
Insurance coverage for firearms victims is important in order to insure that the care is actually delivered. These figures show that the overall costs need not be a big burden to gun owners.
Eugene Robinson has an article “Stop the gun madness” in the Washington Post opinion section. It calls for regulation but does not mention regulation. It’s of interest to this blog because of the flood of comments. There are over 2000 comments in about 24 hours as of 4:45 EST on Jan 1, 2013 and it is getting several comments a minute. A rough scan of the comments shows a mixture with more in favor of increased regulation. I think this reflects Robinson’s usual readership but is different than the bulk of comments in other places which are typically hostle and opposed to all gun regulation. It raises the question of whether the dialog will permenently change after Newtown.
Ben Achtenberg has an article in the Caring for Survivors of Torture blog titled “We Already Have a Way to Cut Gun Deaths.” It makes the case for treating gun ownership with the same standards of responsibility as cars in detail and with strength. He points out our willingness to accept driving tests, licensing, training and mandatory insurance for automobiles. He shows that these are support the use and ownership of cars and that the “the insurance industry has a vested interest in developing regulations and price points that will not unduly discourage car ownership and use.” He then rhetorically asks if there any chance of that happening and answers “In the United States of today, not a snowball’s chance in hell.”
He then goes on to talk about how an insurance system would work on a conventional liability model. He discusses licensing, regulation, market price differences based on risks and insurance prices being affected by safe practices and good records. He supports insurance as a part of universal regulation.
He does not discuss the other models of insurance other than to say that one reader suggested that a surety bond for paying injured parties could replace or supplement insurance. This is a well thought out article and gives a valuable list of links for Related Reading.
Megan McArdle has written a long piece in The Daily Beast entitled “Should People Be Forced to Buy Liability Insurance for their Guns?” It is by far the most detailed and thought out analysis of the suggestion that I have seen since Newtown. While I don’t agree with her conclusion that the problems make insurance as a solution unworkable, she gives logical reasons that need to be addressed.
She starts with three reasons that we would want insurance. The first is to Continue reading
There has been a stream of media articles and blog posts calling for mandatory gun insurance since Newtown. Many of them point out the desirability to have the market weigh the risks of different styles of gun ownership and price accordingly. Almost all have an underlying concern about Second Amendment issues with such a requirement but try to state bravely that it won’t ultimately win out. Here are some interesting recent ones. Continue reading