I'm wanting to say I like this idea, but...
It just freaking sux. There are good cops out there who don't need to be pumped into one insurance ideology (fraud) - but til the bad cops get the punishment they deserve there is no good solution.
This is a general problem with the whole system - including unaffordable healthcare. If healthcare would be free; freakton of lawsuits wouldn't happen.
Without those lawsuits the insurance would go down, lawyers would not clog up the system with 'got hurt in an accident' cases - and this would reflect all parts of society.
I believe the cops not getting punished for being bad is just one of the hundred symptoms of the system failing.