Monday, July 8, 2013

Insurance companies may become quiet heroes in fight for gun control

By Marc Jampole
Frequent readers know that one of my favorite hobby horses is to defend government solutions to social problems against the absurd claims that the free market will solve all problems better than the government.

Most of the facts are in my favor: our wars have become disasters since we started to depend on mercenaries and privately run prisons are a shameful shambles.  Social Security faces a manageable short-term financing problem because the ratio of workers to retirees will fall for a few decades; all that’s required is a quick fix or two. Compare the minor Social Security financing challenge to all the private pension plans that have gone belly up over the past 10 years or to the collective 401K plans of the American public. The public Social Security is on much firmer ground than private retirement solutions, which study after study concludes are severely underfunded.

Having now given one more screed in favor of government solutions, I must admit that the private sector may succeed where government has failed in one instance: in fighting the absurd idea that the way to make our streets safer is for more people to carry guns.

Since the Newtown massacre, the National Rifle Association (NRA) has been campaigning to bring firearms into school. As usual, politicians of both parties have lined up to give the NRA what it wants: As the New York Times reported, seven states have recently enacted laws permitting teachers and administrators to carry guns in schools.

But it’s doubtful that any teachers are going to be carrying guns to class in any of the seven states.  The insurance companies won’t let them. For example, the Times reports that the insurance company that covers 90% of all the school districts in Kansas has told its agent to decline coverage to any school district that permits employees to carry concealed handguns. In Oregon, the association that manages liability insurance for virtually all the school districts will charge an extra $2,500 premium per year for every staff member carrying a weapon on the job.

The Times article does mention school districts that permit teachers to carry and have been able to get insurance, but for some odd reason the writer is not able to name any of the insurance companies providing the coverage to these gun-toting districts.

Insurance companies are often at the forefront of increasing safety, because improved safety leads to a decline in accidents, which in turn leads to fewer claims, which then leads to some combination of lower premiums. I have seen a number of businesses of all sizes improve safety protocols and policies at the insistence of the insurance company. When insurance companies walk away from business, it can affect the economy of a region, for example, in a flood zone. And despite the bad rap they get, health insurers have been at the forefront of preventive medicine, because it leads to healthier patients, which again, lowers claims.

The problem that our elected officials have is that they want to believe that wishing makes it so.  Many legislators and their financial backers wish that we could prove a divine hand created us or that global warming is not taking place or that lowering taxes on the wealthy creates jobs. All nonsense! In the same way, these benighted and corrupt legislators join the NRA in wishing that arming America to the teeth will make us a safer land. Lots of studies suggest otherwise.  In fact, most studies demonstrate that the more guns in a population, the more people will be injured or killed by guns.

Insurance companies do a good job of reducing all risk to money, including the risk of death and injury. When the insurance companies raise rates on school districts that permit gun-toting teachers, it’s because they know that they will have to pay out more claims because of death and injury.  They’ve run all the numbers and they know that more guns in a workplace will cost them money. Somebody is going to have to pay—some with higher premiums, some with their lives.

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