Questions and Answers on Mandating Gun Insurance.

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This post is a good place to start if you’re new to this blog.  Scan the questions and follow the <More> link if you have an interest in a particular area

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. <More>

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.

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Registration of guns and confirmation of insurance

In order to have a system of insurance the covers the dangers of having guns in our society, it is necessary to have a way to be sure that insurance exists that covers each victimization. The simplest system is to mandate the insurance and have the government check that it is in place. This requires that the government be aware of the identity of the gun owners in order to enforce the mandate. This means registration of guns or gun owners. The political objection to this is very great. If it is necessary to override this objection or wait for it to dissipate, then implementation of insurance for gun victims will be greatly delayed.

The Objection To Registration

Many people who are concerned about gun safety are not aware of the depth of the fear of government held by some of the gun rights defenders. There are a considerable number who have deep and broad paranoia which has been focused on this issue with severe personal mental health issues but an even larger number are simply trained to express this distrust by gun organizations, the media and those who want even more guns in circulation. Even more are aware that some form of tracking guns is essential for application of many measures to control or limit their circulation. They may fight registration of firearms as a way to prevent control of firearms.

A good bit of this concern has been embedded in current federal laws. There is law in place forbidding a federal registry of ordinary guns (not including NFA items such as machine guns). The Brady Act and the Firearm Owners Protection Act both have such provisions.

The concern about registration of guns leading to confiscation also forms a part of much of the writing that’s done about the guns in the current material circulating on the Internet. For example in an article dated February 27, 2013 titled “Debunking the ‘no one wants to take your guns’ myth” which is featured on the website The Truth About Guns and is about New York’s new law which outlaws or limits certain types of weapons the author first states:

And given New York’s history, its not unlikely that such registration is simply a precursor to a complete and total door-to-door confiscation down the road. Since they now have a convenient list of gun owners.

And then later in the article:

And the removal of a grandfather clause from the proposed legislation can only mean that full-scale confiscation is in the offing. They are, indeed, coming to take away our guns. Even the “hunting rifles.” And those who are still trying to pass off that old lie are either too ignorant of the proposed legislation or too entrenched in the party rhetoric to understand the lie they’re spouting.

In another article on that same site titled “Chicago Firearms Confiscation Begins” the first sentence is “There’s a good reason that law-abiding gun owners don’t want their names on a national gun registry – namely registration leads to confiscation ….” This is taken for granted by a salient group of writers and advocates for guns. They generally don’t make any arguments as to why registration would necessarily be a first step to taking guns away from current gun owners but assume that their readers are already convinced that that will happen. They are glad, however, to point out any situation that they can interpret as a confiscation following on some form of registration. They also assume that the government will take any steps that are possible to forward that process. For example, one of the primary objections to requiring insurance for guns is that the government could, at least theoretically, force the insurance companies to turnover their lists of customers. I have not found any objection to the National Rifle Association compiling a huge list of gun owners going well beyond their membership.

An Insurance Requirement without Additional Registration

Permits to carry guns are a form of registration in themselves, but they exist in many states. As has been pointed out on this blog, carrying a firearm in public creates an array of additional dangers to the public. Additional registration of gun owners would not be necessary, but it would be highly desirable to have insurers aware of the serial numbers of the guns covered and have guns reported if the owner loses control of the gun. That way insurance could cover cases where the gun was lost or stolen and then resulted in a shooting.

For a general insurance system, this blog is recommending that “Top Down” or chained insurer responsibility be employed to guarantee coverage. Insurance would be required of manufacturers with a provision that the insurer only relinquishes responsibility for a given gun when another insurer take it up. Making that absolute no matter how the gun changes hands will make sure than once a gun is insured it will stay insured, without requiring that anyone other than insurers track the gun. Let the gun owners buy their insurance through the NRA if they don’t trust other insurers.

John Wasik Calls for Gun Insurance Again.

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.

Wasik says the liability laws evaluate harm well and insurers will have an incentive to pressure gun owners for safety.  He does not mention no-fault principles which would be needed for effective general coverage.

2. Liability insurance should be required of all sellers and manufacturers.

He points out the importance of their responsibilities in selling and distributing guns.  He alludes to but does not explicitly state that their responsibility might continue to guns that were improperly sold and not insured by purchasers.  This chain of continuing responsibility is the core of this blogs advocacy for getting insurance in place to cover all gun injuries.

3. Liability Insurance is good business.

Wasik points out that the additional business should be welcomed by insurers and agents.  He does not point out that the insurance industry adamantly opposes any mandates for insurance in any area.  As this blog has often stated, this is because insurers think that mandates will bring regulation and especially regulation of prices.

4. Insurance is an accepted economic vehicle that’s been around for more than 200 years.

This is certainly true. Over that long time every new form of risk that has appeared has resulted in innovative solutions from the insurance industry.  Guns are the only important activity that has a substantial danger unaddressed by insurers.

5. The social costs are staggering and insurance can cover some of them.

Wasik mentions the medical costs which are only a part of what insurance should cover.  Worker’s Compensation and some Motor Vehicle insurance covers many economic damages—loss of work and support of dependents.  Even with these costs spreading them of the the huge number of guns to be covered would make insurance affordable.  The existence of an insurance requirement would reduce the number of incidents through it effects on safety and reduce the cost further.  It would also reduce the even greater costs of gun violence that are spread throughout society rather than concentrated on victims of shootings.  Costs such as reduction of property value, avoidance of activity through fear and the cost of protective measures.

John Wasik recognizes that dealing with guns is a difficult task for our society and will take a long time, but that insurance is one of the best tools we have.

NYT OP/ED’s on Gun Manufacturer Responsibility—Insurance by Other Means

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

Finley and Culhane’s compensation fund would be similar to no-fault insurance in the benefits it would provide for victims.  They envision:

For every gun sold, those who manufacture or import it should pay a tax. The money should then be used to create a compensation fund for innocent victims of gun violence.

This proposal is based on a fundamentally conservative principle — that those who cause injury should be made to “internalize” the cost of their activity by paying for it.

This is a very straight forward proposal.  They make the comparison to the existing system for protecting people injured by vaccines with a tax on the manufacturers.  That system has worked for years to facilitate vaccine manufacture and use, to compensate those injured, and to give greater confidence to the public.

As a form of insurance, it would accomplish one of the main goals advocated by this blog in compensating victims.  Because it is attached to neither the specific guns or the specific gun owners, it can avoid the major problem of covering guns in the hands of persons outside the law–who could not be compelled to purchase insurance.  It would not, however, contribute greatly to the second goal advocated by this blog—encouraging gun owners and users to have practices which reduce the level of injuries.  That’s were the second plan meshes perfectly.

Let Shooting Victims Sue

Robert Morgenthau’s proposal is to roll back the 2005 federal law the Protection of Lawful Commerce in Arms Act which protects arms manufacturers and sellers from almost all responsibility for their products after they are sold.  He states:

This kind of legislation encourages arms dealers to turn a blind eye to the lethal consequences of what they peddle, and rewards their breathtaking irresponsibility.

An executive at one top gun company admitted that it didn’t try to learn whether the dealers who sold its firearms were involved in the black market. “I don’t even know what a gun trafficker is,” he said in a court deposition reviewed by The New York Times.

Morgenthau goes on to describe the out of control gun violence that we currently have in this country.  He points out the deprivation of the rights of states to protect their citizens and states “a basic principle of law that imposes liability when someone’s unreasonable act results in foreseeable harm to someone else.”  He also gives historical parallels with the tobacco and motor vehicle industries being brought from a condition of causing many deaths to a much greater safety today.

Insurance by Another Means

This blog exists to advocate insurance to compensate shooting victims, encourage safe practices and not be an excessive burden on gun owners.  These proposals if both were implemented would accomplish the greater part of that mission.

National Assn. of Mutual Insurance Co’s Against Gun Insurance.

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.

Insurance Industry Still Asleep, Hostile by Default to Gun Insurance

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.

50 Guns cross the line to illegal hands

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.

Article: Gun used to kill N.Y. cop came from Virginia

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.

Article: “Medical bills can mount for shooting victims”

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.

Comments flood Eugene Robinson Washington Post Opinion

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.