The Role of Reinsurance in Mandated Gun Insurance

A gun insurance system designed to encourage safe practices will need to maintain insurer responsibility for lost, stolen or improperly transferred guns. This is essential also to using continuing insurer responsibility as the means of guaranteeing coverage of all guns once they enter the system. Insurers will face risks that continue into the indefinite future for guns whose location is unknown. Specialists in assessing these risks will be needed to encourage the sale of this insurance. This is often done by specialty reinsurance companies in various areas in our economy.

Reinsurance is the practice of insurers buying their own insurance from other companies and thereby transferring part of the risk out of their hands.

Separation of risk after loss or theft

The primary insurer will be able to treat their risk as that of having to buy reinsurance in the event that the gun owner loses control of the insured gun. As the specialty reinsurers establish a market with prices and terms for assuming the risks, the primary insurers will become able to view themselves as selling insurance for the risk of having such a loss of control of the gun. This attitude on the part of insurers is just what is needed to have them take the best role in demanding safe practices. They will put terms in their policies that are designed to stop guns from straying and, thereby, protect the public from the effects of stolen and diverted guns.

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Federal Mandate for Top-Down Insurance

A federal requirement that all manufacturers and importers have insurance that protects victims of their products with a top-down provision requiring it to continue until replaced is the core of a successful system for guns. Ideally this requirement would specify the terms and benefits laid out in the next level for state legislation that seriously provides for victims, but this will describe the minimum requirements that should be specified on a national level.

A bill (H.R.1369) proposing mandated gun insurance was introduced in the United States Congress in 2013, but it did not specify details of the insurance required in the language of its introduced.

The legislation should require that, before manufacturing or importing a firearm, insurance must be accepted by an insurance company specifically authorized to issue such insurance by some state. In order to make certain that the required financial stability is available, all such insurers should be required to join a pool backed by all such insurers guaranteeing each insurers ability to pay valid claims. Once an insurer accepts responsibility for a certain gun, that responsibility is only relinquished when another qualified insurer takes it on. Continue reading

Should Gun Owner’s Insurance Pay Victims After Gun Theft?

The insurance model recommended by this blog is designed to have insurer retain responsibility for guns after they are stolen.  That means that if a responsible gun owner has a burglary and a gun is stolen and then after the gun changes hands, goes underground and turns up to injure someone in a distant location then the gun owner’s insurance will have to pay.  Gun defenders are quick to object and say that the burglar and the shooter are responsible and the gun owner shouldn’t be held to account for their acts.

In those cases the criminals are, of course,  responsible and if they can be caught and have resources they should be the first to pay to the injured party.  Unfortunately, they often aren’t caught and they don’t have resources and, if they go to prison for their crimes, are unlikely to earn enough in the future to redress the damage they have done.  So the question is should the legal gun owner or the gun owner’s insurance be held responsible in light of their role as enablers of this unfortunate situation.  My answer is that they should be.

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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 ‘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.

Related: Insurance-Good for Victims, Safety and Gun Owners

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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CCW Permit + Stand Your Ground = Insurance Need

Many states have adopted stand your ground laws that protect shooters in public spaces that accidently(with or without negligence) either unintended bystanders or innocent persons who are wrongly believed to be a threat.  This is the most uncontroversial situation where insurance should be required.  These innocent people need to be protected and many of them are not insured themselves.

As this blog has argued people who have permits to carry weapons into streets and outside the home.  These people are more likely to confront real and perceived threats with an audience of bystanders.  They represent an additional risk over those who only have guns for protection in their homes.  These risks and the relative ease of insuring against it are described in another post “Enacting a Concealed Carry Insurance Mandate

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Projected Costs for Gun Insurance are Low!

People who are opposed to gun insurance will often make arguments that the cost will be prohibitive.  They make guesses that it would cost typical gun owners thousands of dollars and work as a backdoor way to prohibit guns.  This is not actually what would happen if insurance was required.  We have enough information to make estimates that would put a ceiling on the average cost and it turns out to be quite reasonable.  Of course, insurers would take particular situations into account and dangerous owners and situations would pay more than average, perhaps much more; but, that’s realistic and can be handled by the owners taking measures to reduce the dangers.

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Gun Insurance for Willful, Intentional & Criminal Acts.

One of the things that opponents of gun insurance or insurance trade representatives often say is that insurance cannot cover intentional or criminal acts.  This is simply false.

There are many kinds of insurance that cover such acts.  The key is that the insurance pays to the victim and not the wrongdoer.  It doesn’t have to matter if the deed is done by the purchaser of the insurance or another insured person.  It is important the the policy be written to make this clear; policies that exist at least partially for the benefit of third parties typically work that way.  Insurance that is compelled by law for an activity often applies in these cases even if it’s not spelled out in the policy, but courts differ on this point and an explicit requirement in the legislation and in policy language is a good idea.

Insurance textbooks teach that whether an act is accidental or willful is determined from the viewpoint of the insured.  Mandatory insurance should treat a victim as an also insured party. This is necessary because the purpose of many kinds of insurance is to protect the insured against the willful acts of outsiders. An example would be a day care center that is negligent in screening visitors who might commit an abuse against a child.  From that viewpoint, a act that is deliberate on the part of the abuser is an accident to the victim.

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Enacting a Concealed Carry Insurance Mandate

While it would be ideal to have a gun insurance adopted at a single time as one well designed national mandate, it’s likely that political reality will force it to come into being in stages.  The logical place to start is for the more amenable states to require insurance for holders of permits to carry firearms in public.  If this can be extended to general coverage of guns in some of these states, the stage is set for a federal mandate for top-down insurance which extends into any state requiring insurance.  This in turn will encourage other states to have their own requirements in order not to have their citizens paying for insurance without their state receiving benefits for victims.

Concealed Carry as a Start and an End in Itself

Mandating gun insurance for holders of permits to carry weapons in public is much simpler than mandating gun insurance in general.  Permit holders are already registered with state government agencies; there is no need for an additional registration system.  They are generally responsible people who have already shown their willingness to cooperate with reasonable regulations.  Insurers will find these people to be desirable customers.  Most measures to deal with gun violence have to deal with the flood of illegal weapons that come from states with weak regulation of gun trafficking.  But, states requiring insurance for permits can simply refuse to recognize permits from other states without insurance requirements or require proof of insurance in addition to such a permit.

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The Need for State Regulated Gun Insurance with a Federal Mandate.

The answer to the question of whether we need to mandate gun insurance at the federal or the state level is to have the mandate at the federal level and the regulation of the insurance at a state level.  The special problems that guns have of illegally traveling across state lines to do their damage and of states varying so much in their willingness to regulate guns can be solved by this structure.  The federal mandate should implement the top-down process for continuing insurer responsibility advocated by this blog.  It should require that the insurance pay benefits to victims in accordance with the gun insurance requirement in the state where the shooting occurs.

One of the special difficulties that makes guns different than almost any other risk, is that move around from state to state so easily once they are in illegal hands.  Much of the country has a relatively small problem with illegal guns and people there see no need to make access difficult.  In other parts of the country, there is a major problem with death and injuries from illegal guns.  No matter how carefully places like New York, Chicago and Washington, DC work to stop the transfer of firearms to dangerous people they cannot control the flood of weapons that come in from areas with more permissive policies. The process has been named the Iron Pipeline.

This blog believes that requiring insurance is a practical way to deal with the problem.  Insurers that remain responsible for deaths and injuries from guns after they pass into illegal hands will set up conditions to prevent that passage.  They will find ways to do this that are minimal inconveniences to legitimate gun owners.  The question is how to get a requirement for such insurance into place in this environment.  The states that sell the most guns are least likely to make such a mandate.

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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.

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