Representative Carolyn Maloney (D-NY-12) has introduced a bill, HR-2546, to require insurance for firearm transfers again in the congress. The bill has been co-sponsored by representatives: Blumenauer (OR-3), Clark (MA-5), Grijalva (AZ-3), Lynch (MA-8), McGovern (MA-2), Rangel (NY-13), and Tsongas (MA-3). It is a requirement for liability insurance for sales of firearms. As introduced it does not specify the amount of insurance required or the parties to be protected by the insurance.
This blog has pointed out many times the limitations of the liability insurance model for protecting victims of gun violence; but many people easily see the parallels between the car insurance requirement and the need for gun insurance. Liability insurance, as implemented in various states for the protection of people injured by cars, is often modified by the provisions of a mandate to be in a form which, while called liability insurance, is really based on some other insurance system. These systems are typically called no-fault insurance or personal injury protection as well as being nominally called liability insurance. They pay benefits directly to victims.
One of the good models for gun insurance is found in the requirement for a personal injury protection endorsement to car insurance in Rep. Maloney’s own state, New York. It is codified in New York Regulation 68. This provides for persons not covered by their own insurance (such as most pedestrians) a requirement for no-fault benefits which are paid directly to first parties (injured persons).
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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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.
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.
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.
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 bill HB976 has been introduced in the North Carolina Legislature. It has several gun control provisions including $100,000 in mandatory gun liability insurance. This insurance goes farther than in most other states by applying to willful acts and to unreported stolen guns. The bill introduced by Rep’s Luebke, Insko, Harrison and Adams has 7 sponsors so far. It was introduced on 4/17/13, showing that momentum to deal with gun violence is continuing and that insurance is seen as a part of the solution. There have now been bills introduced in 9 states and the US House.
Representative Carolyn Maloney along with 8 cosponsors has introduced a bill, H.R. 1369 – Firearm Risk Protection Act of 2013, to require that gun buyers and sellers have “qualified” liability insurance when they make a transaction or continue to own the gun. They would be fined up to $10,000 if they do not have and maintain the insurance. The text of the bill does not define “qualified” and gives no further details. I spoke on the phone with Rep. Maloney’s press contact and was told that the bill will be filled out with more detail in the future. In this diary, I will lay out the principles and elements that should be considered when the bill language is developed.
Gun insurance should serve to protect victims and promote safe storage and use of firearms, without being an excessive burden on gun owners (for a description of possible insurance see here). Unfortunately, conventional liability insurance as sold, for example by the NRA, is designed only to protect the gun owner not third party victims. Gun insurance, like any insurance that is mandated by government or required as a condition of doing business, should be designed to protect those injured by an incident. Moreover, it needs to protect the public by encouraging safe practices. Currently, gun insurance only protects the gun owner from theft and lawsuits. Continue reading →
We have responsible ways to handle things which are dangerous but which are not made illegal because of their actual or assumed benefits to society. We look carefully at ways to contain the dangers and enjoy the benefits in almost every case. The exception is firearms, but we are just beginning to pull our heads out of the sand and examine this important subject.
First Principle — Mandatory No-Fault Insurance to Cover All Victims
One of the most powerful tools to facilitate a dangerous activity is insurance. Unfortunately, requiring insurance to cover gun violence has been looked at only as a way to penalize gun ownership or at least to transfer costs to gun owners. The result is calls for high limit liability insurance, usually with terms that make actual implementation unlikely. This blog argues that the tort/liability model is one of the least effective ways to increase safety and provide for victims. A No-Fault system similar to worker’s compensation or some motor vehicle insurance is much better. It needs to follow a gun that changes hands in a way to insure that all guns are covered.
Second Principle — Top Down Insurance Does Not Require Gun Registration or Owner Tracking
This blog also is advocating that insurance be required of gun manufacturers or anyone bringing a gun into the system in such a way that the insurer only relinquishes responsibility when another insurer (contracted by a new owner) takes it up. Insurance should remain in effect through any transfer legal or not. This would allow confidence that insurance was always in effect without tracking the gun owners. With a proper No-Fault system the victim would not have to even be told the name of the owner to collect compensation. All transactions by claimants or the government would be with the insurance companies.