Why gun insurance should be mandatory
It’s been over a month since the Arizona shootings rocked our nation’s soul and Congress still has yet to address gun control. What gives? Egypt is no doubt at the forefront for Obama, but Congress is alarmingly quiet on the issue. Is it that a Supreme Court ruling last year and the power of the National Rifle Association are still unmovable obstacles to real reform? Only New York Mayor Michael Bloomberg seems to be beating the drum for this serious issue.
There might be a way to reduce the incidence of gun violence if viewed through the unique lens of risk management: Require both gun buyers and sellers to purchase liability insurance.
Before you get up in arms (I mean this literally) about my views on the Second Amendment, I want to be clear: I’m not against people owning guns, hunters or the right to bear them. I’ve shot guns and enjoyed skeet and target shooting enroute to becoming an Eagle Scout. My father owned guns and kept them in the house when I was growing up. He encouraged me to learn how to use pistols and rifles. I’m well schooled in gun safety.
In certain cases, though — such as a deranged adult, a teenage gang banger or a domestic violence perpetrator — guns should not be easily accessed. Unfortunately, there’s no way we can keep guns away from the most violence-prone through background checks. And we have no effective ways of gauging whether the mentally ill or substance abusers will turn violent.
Instead, the mandatory purchase of liability insurance would obey commonly accepted actuarial rules of risk-based pricing. In common English that means the people judged by objective industry research to be most likely to commit a gun crime will pay the highest premiums. What about those who use “straw buyers” or private sellers? Make all gun sellers purchase insurance.
There’s a precedent for mandatory insurance that’s hard to ignore. Nearly every state requires “dram shop” insurance for bar owners. That covers business people from the harm their patrons might do if they’ve been over-served. Everyone from corporate directors to dry cleaners buy insurance to protect themselves and the people they serve.
Insurance companies are well versed at measuring and pricing risks. They’ve been doing it for hundreds of years. Have you filled out a life or health insurance application lately? They can search credit records, detailed medical histories and get more information on you than you can imagine.
Risk-based pricing is fueled by a whole body of research that identifies who might be a victim in a gun crime or accident. Elderly people living in Florida gated communities, for example, don’t commit a whole lot of gun crimes. Far too many kids are at risk: Some 90,000 children were killed by gunfire between 1979 and 2001, according to the Children’s Defense Fund. That’s almost twice the number of soldiers killed in the Viet Nam war. In fact, American children are more at risk from firearms than any other industrialized country.
Most civilized people accept the idea of insurance in all of its forms. We know that younger drivers pay more for individual auto premiums because they have higher accident rates. Homeowners along the Atlantic coast pay more for homeowner’s coverage because they are more likely to be hit by hurricanes than those in the Midwest. You’ll pay much more for life and health insurance if you smoke or have a chronic disease.
Homeowner’s insurance pricing offers a familiar model: You get premium discounts for safety devices like smoke detectors, alarms, deadbolts and sprinklers. Under gun insurance pricing, you would get significant reductions for trigger locks, home gun safes and attending safety training classes, so most responsible gun owners would be rewarded.
If you think that the mandatory insurance idea is onerous, think again. You can’t finance a home mortgage without homeowner’s and title insurance. Want to buy a car? Most states require liability insurance. Forget about employing anyone in most states without worker’s compensation or unemployment coverage.
As it stands now, only 22 cities and two counties in California require gun dealers to buy liability insurance, according to the Legal Community Against Violence. It’s not known if any jurisdiction requires buyers to purchase liability coverage, although a state legislator in Illinois proposed such a law in 2009 (it was defeated). Note: the NRA itself currently endorses “excess liability” insurance for gun owners.
Under the insurance model, a steep premium may not only make it harder for a violence-prone individual to buy a gun, it may help society pay for the costs of gun injuries. Combined medical and legal expenses connected with gun violence are costing Americans an estimated $100 billion a year.
Will criminals still be able to get guns? Unfortunately, yes. But those unbalanced individuals seeking to buy a gun quickly though legitimate retailers will face the intense gauntlet of the insurance industry. It’s certainly not a total solution, yet it has some tangible value for society.
Photos; Top: Toy pistols handed in by residents are pictured during the “Guns Exchange Program” at a working class neighbourhood in Monterrey February 9, 2011. REUTERS/Tomas Bravo
Bottom: Weapons recovered from defendants accused of trafficking illegal firearms to Mexican drug cartels are displayed along with a .50 Caliber Machine Gun after a news conference in Phoenix, Arizona January 25, 2011. REUTERS/Joshua Lott