Can life insurance be a lever to push down gun ownership?

About our epidemic of gun violence, I have a somewhat “actuarial” question: are life insurance companies a good pressure point for reducing gun violence? Here’s my logic.

Facts:

  1. Cancer survivors have to wait five years after getting a clean bill of health before they can get a reasonably-priced life insurance policy. (My own five-year anniversary is Jan 31, at which point my quoted rate drops to normal instead of ~$800/month.)
  2. In 2009, there were 9,146 homicides by firearm — in the top 50 causes of death in the U.S. that year, that puts homicides by firearm above 3 cancers and at least 5 other diseases that would disqualify a person for life insurance.
  3. While I can’t find an exact number, there is a significant correlation between a person owning a firearm and that same person dying in a homicide by firearm. Anecdotally, I’ve heard it doubles your risk.

I spoke with an insurance company this morning, and they confirm they do not take firearm ownership into account when they determine the price of a life insurance policy. So questions:

  • Why don’t they?
  • If there’s a good actuarial reason for not taking gun ownership into account, could it be that those less-likely causes of death reinforce each other, that those with cervical cancer are significantly more likely to get oral cancer? In other words, do deaths by less-likely causes of death add up to something higher than the homicide of a gun owner?
  • Conversely, are there causes of death correlated to gun ownership other than homicide (and suicide)? The likelihood one will develop alcoholism? That one will die by other kinds of violence?
  • If so, are those absolute numbers too low to matter to insurers? 0.8% of Americans died in 2009. .003% of Americans died in homicides by firearms, so 0.37% of all American deaths in 2009 were by homicide by firearm.
  • What percentage of those .37% (that original 9,146 homicides by firearm) were eligible for life insurance?
  • Of that percentage, how many owned guns?
  • Is that number too small for insurance companies to care?

Probably. Conclusion: Convincing life insurers to charge more of gun owners, with gun ownership as the sole factor in price, would have little effect on homicides by guns. Another factor might be that the U.S. has so many gun owners, the “gun homicide premium” is already socialized throughout the life insurance-holding population.

That leaves health insurance premiums as the remaining commercial, as opposed to legislative and cultural, deterrent to gun ownership. That’s especially true in that health insurance is triggered throughout one’s life, rather than just at death: health insurers would have a strong motivation to charge more of gun owners should gun ownership be strongly correlated with non-fatal injuries or illnesses.

Or are there other commercial deterrents?

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  • Guest

    I have been thinking about this lately myself. Although I
    could never articulate it the way you have.  Insurers only interest should be how to price
    risk but I’d guess there are factors they won’t touch – race being one. Hard to
    believe that gun owners deserve that kind of special treatment.  I ‘m sure that they have the most accurate
    data on the subject whether or not they use it officially I don’t know. There have
    been cases where Insurers were accused of dropping home-owners coverage due to
    guns in the home (see link).  Insurers
    also have a good idea where and what types of guns are out there because people
    insure their guns. Property and Casualty insurance might be the most powerful
    commercial deterrent because of accidents involving guns where the cost to the
    insurer could be astronomical. This is a very interesting topic that deserves a
    lot more attention.

     http://www.outdoorlife.com/blogs/gun-shots/2011/02/are-gun-owners-being-dropped-insurance-policies

  • http://fungibleconvictions.com/ Andrew Whitacre

    Yeah, when I started searching for relevant information on “insurance and gun ownership”, every link was a discussion on how to insure your firearm. But I never thought about how that means insurers know which of their customers own firearms (at least those who have homeowners insurance and property insurance with the same insurer). Again, I think that’s something insurers would take into account — and would be right to — if the numbers justified it. Owning a gun is a choice.  It’s not like health care, where by and large people don’t have a choice about whether or not they get sick.

    With regard to the Outdoor Life post, it’s interesting that they freak out about the possibility insurance would be a precondition for gun ownership (though they don’t say what kind of insurance). It would seem to parallel the obligation to buy auto insurance and, now, under Congress’s authority to levy taxes, to buy health insurance. But if my stats above are right, there simply aren’t enough deaths for this kind of insurance to make a meaningful change.

    Any other commercial (i.e., non-legislative) ideas?

  • Guest

    You’ve got me thinking now. If you look at Life Insurance rates (and probably health ins.) it doesn’t take big numbers for ratews to increase. The chances that a 30 year old diabetic dies in the next 10 years I would think is pretty slim but a 10 yr term policy will cost them 3 times as much if they can get it at all. The cost of insurance goes up significantly for history of depression, weight, blood pressure.
    It seems to me that they treat accidental death differently. i don’t think they ask if you ride a motorcycle for instance. They do however look at driving record and international travel. I’m just thinking out loud here.

  • Jim Dorsey

    So, does this apparent pattern of not charging higher premiums for gun-owning insured individuals seem to be universal? Are ther no exceptions?
    Also, if they, in fact, don’t charge higher premiums for gun owners, aren’t other insured individuals in the pool paying the freight on the increased risk of a firearm in the home. Implicitly yes.
    It would be interesting to know the insurance industry’s perspective on this issue. Unlike the CDC, they theoretically haven’t been restrained from collecting and analyzing such information. Whether they want to be seen to share or discuss is another matter.
    Maybe the Senate Judiciary Committee would be interested in getting a look at that information.

  • http://fungibleconvictions.com/ Andrew Whitacre

    Related to this, which I had seen suggested elsewhere, is liability insurance for gun owners. But this is the first time I’ve seen it suggested that there be a mandate, similar to liability insurance for driving an automobile:

    http://www.nytimes.com/2013/02/22/us/in-gun-debate-a-bigger-role-seen-for-insurers.html