Insurance firms, long accustomed to nudging Americans toward safer cars, homes, and pools, may be overlooking a domain with far greater social cost: firearms. A new paper from the Niskanen Center argues that insurers could use familiar levers - incentives, pricing, and coverage conditions - to mitigate gun-related deaths and injuries, which carried an estimated $557 billion in economic costs in 2022.
The report, authored by Kerri M. Raissian of Yale and Jennifer Necci Dineen of the University of Connecticut, suggests that the industry’s silence amounts to a market failure. “Strategies known to be effective are underutilized because free-market forces are not bringing them about,” the authors write
Insurers have long required seatbelts, pool fences, and fire alarms to cut losses. Homeowners’ policies often hinge on those conditions. Auto insurers reward good grades or defensive driving. Health insurers encourage vaccinations and screenings. Yet when it comes to firearms, insurers rarely impose requirements or offer incentives, even as accidental discharges, suicides, and mass shootings impose measurable costs on medical, disability, and life policies.
“Firearms are more difficult for insurance companies to detect than automobiles or swimming pools,” the authors acknowledge. Unlike cars or pools, guns need not be disclosed to an insurer. But as with smoking or scuba diving, coverage terms could still be used to adjust pricing or encourage safer behavior.
The paper outlines how different lines of coverage intersect with firearm risk:
Despite this broad exposure, insurers have not pursued prevention with the vigor shown in other safety campaigns.
Part of the answer lies in misaligned incentives. Health insurers absorb medical bills, while life insurers pay out after suicides. But homeowners’ insurers - well-placed to encourage safe storage - do not see those downstream costs. “An insurance company cannot offer both health and homeowners insurance due to industry regulations,” the paper notes, making prevention less attractive when benefits accrue to another carrier.
There is also political resistance. Mandates requiring gun liability coverage, like San Jose’s 2022 ordinance, remain rare and contested, though courts have upheld them. Bills in states from California to Tennessee have floated similar proposals, with mixed traction
The authors outline three approaches:
Firearm harm is not uniform. Massachusetts recorded just 3.7 deaths per 100,000 people in 2023, compared with Mississippi’s 29.4. In Wyoming, suicides drive the statistics; in Mississippi, homicides dominate. That patchwork complicates actuarial calculations, but it also highlights where prevention might yield the greatest returns.
For insurers, the choice is whether to treat firearms as an uninsurable social problem or a preventable risk - as they once did with automobiles. Raissian and Dineen argue the latter is possible, but only if the industry, lawmakers, and regulators are willing to recalibrate incentives.
“Through tax credits, direct subsidies, or market stabilization,” they conclude, “policymakers could make the insurance industry a critical part of the nation’s ongoing effort to reduce firearm-related harms”
