In addition to policy arguments such as those against putting costs and responsibilities on the public or burdens on gun owners, the insurance industry has offered two major substantive arguments against mandating gun insurance. The first, which is the claim that insurance does not and cannot cover, intentional or criminal arguments is simply false. This has been extensively explored by this blog at the post entitled “Gun Insurance for Willful, Intentional & Criminal Acts.” The second argument is basically a “Chicken and Egg” objection. They claim that insurers have no experience to price such insurance and that without ratings experience such insurance cannot be sold. This post is to show the reasons that this objection is of greatly diminished importance in the case of mandatory gun insurance.
Why can’t insurers simply add up the losses that are occurring as they are reported by emergency rooms, as part of claims for various other kinds of insurance, media reports and government statistics and assign them different weights in an estimate? The basic reason is that, with voluntary insurance, the people who will actually buy the insurance are not a representative sample of the risk exposed public. Sometimes that works for the insurers advantage because people can buy insurance because they are more than typically responsible in many ways and produce fewer than average claims. But those who know that they have an elevated risk can buy insurance for that reason as well. Continue reading