Right - but you are not considering that it's possible for a police department to be so bad as to be uninsurable. Even if the police continue to do misconduct, bad departments would get into situations where no insurer will cover them, and they are forced to make changes. It's not a perfect fix at all, but it would be a nice end-around for qualified immunity.
Then the state may do what it has done for habitually dangerous drivers and either make it illegal for private insurance to deny them or create a public option that hemorrhages taxpayer money (so back to where we are now, with extra steps).
Just fire them after the first fuckup. It does not need to be this complicated.
There is actually a federal register for LEOs that have been terminated for cause or resigned to avoid termination.
The police unions that operate in the jurisdictions that employ 70% of US police have negotiated into their CBAs that the register “cannot be used for hiring or promotional decisions”. Read into that what you will.
Just make them pay for the insurance out of the pension fund. Better yet, make individual officers personally liable for acts outside of their official duties such as civil rights violations and crimes. After the first few cops lose all of their money in court the rest of them will start actually policing themselves.