AnCap Products I'd Like to Buy #2--Insurance against Crime

This product occurred to me as I was listening to a podcast of Chapter 13, "Punishment and Proportionality", of Murray Rothbard's "The Ethics of Liberty". I was contrasting Rothbard's discussion of criminal punishments to Randy Barnett's examination of restitution. Why can't I simply use an insurance policy to determine whatever restitution I deem appropriate if I am the victim of a crime?

I would expect to have a list of crimes--robbery, kidnapping, assault, rape, embezzlement--each with a benefit payable that I determine. If I find the thought of being raped particularly heinous, I would choose a larger benefit (with a proportionately larger premium) if I were a victim of that crime. If being the victim of auto theft did not particularly bother me, I could insure for a smaller benefit.

The insurance company would have to base its premium on the risk of the crime occurring, its ability to investigate the crime, to apprehend and prosecute the criminal, and to receive compensation from a convicted criminal. The company would not make guarantees of conviction or punishment to me, in order that they can negotiate a plea bargain with the criminal to recover the maximum compensation from him. The company may be fortunate enough to recover my benefit from the criminal, or they may have to make up the difference from collected premiums.

My benefit should include a lump sum for "psychic damage" which included any desire I had to see the victim punished. The benefit should also include a varying payout related to the financial costs I incurred from the crime--damage to property and medical costs. An administrative cost could be added according to the number of hours I had to spend assisting the insurance company with investigation and prosecution (perhaps in the standard contract I have to provide "all assistance as required by the company" and I can purchase an optional rider to compensate my time above, say, six hours per claim).

I would expect the jurisdictions I was traveling in to also affect the premium. Premiums may be higher in New York State if they had a legal system that was uncooperative to insurance companies, focusing only on making criminals pay "debts to society" and may be lower in Florida if their judges were willing to enter arbitration with the insurance companies more readily. Premiums on the high seas would be related to the insurance company's ability to privately apprehend and recover compensation from criminals.

If insurance companies were motivated to prosecute crimes for the benefit of victims, would victimless crimes be crowded out of the courts? Would insurance companies provide competitive pressure to make government law more efficient?

Would insurance companies become powerful enough relative to governments that they could provide protection against crimes committed by governments?

Would such organizations become coercive? The easiest way to become coercive would be for the insurance company to lobby for licensure and a mandatory market from the government, then use a monopoly position to prosecute "criminals" in such a way as to maximize their profit. What safeguards could protect against this?

Are there laws today to prevent me from insuring myself against criminal injury? Or could insurance companies be a bridge from the punishment/rehabilitation model provided by governments today to a victim restitution model independent of government?

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You can insure property

You can insure property against theft, arson, vandalism, it's very common. If the sums are large, the insurance may use its own investigators, hire them on the market or offer a reward. They will also collect whatever is recovered, or return it to you and get the payment back.

The biggest obstacle right now to what you're looking for is that the state steals from the victims their right against the aggressor for criminal lawsuits.

Not a bug, a feature

The biggest obstacle right now to what you're looking for is that the state steals from the victims their right against the aggressor for criminal lawsuits.

That is what I especially liked about this product. It provides a "black box" that gives me the type of justice system I want--private businesses competing to provide me with the best restitution if I am a victim of crime.

The current legal system of various jurisdictions is inside of the black box. Hopefully, as different insurance companies compete to provide the best premiums, they pressure different monopoly jurisdictions to be more efficient at serving the insurance companies, and thus the end customers.

Customers get used to the idea of paying regular premiums for protection against criminal acts from various parties, no matter what jurisdiction they are in. Whether I am on a seastead, docked in Cuba or Florida, or on the high seas in between, I have the same protection, though I may notice that my premium is more expensive in inefficient legal jurisdictions. If a jurisdiction's legal system is completely uncooperative to the insurance company, they are simply paying out benefits from premiums collected.

If the story has a happy ending, there are enough competing insurance companies that my policy protects me against wrongful acts by other insurance companies, or even governments. Eventually people are protected against crimes like regular theft of wages or interference between willing buyers and sellers. Government will have disappeared, and no one notices except that their premiums have gone down.

If the story has an unhappy ending, there is a cartel of only a few companies, and they make special exclusions to not protect against crimes caused by other protection companies, they demand mandatory premiums from customers, and then they start battling with each other to merge into a single organization with total market share. In other words, we get the same situation that we have today under governments alone.