Smuggling is fun. Yes you get blown up sometimes. That's part of the game, get used to it. That's one of the reasons I think the prices should be bumped, not just to make it more profitable, but also more risky. Make it so every smuggler is risking 20-30 mil on a load of contraband in a firefly. That will also deter smuggling in barges (something that should NEVER happen) because the risk will be too high.
The other thing is slap the smugglers who get caught. Fine them heavily, add them to the criminal registry, whatever you have to do. What is irritating some people is when the faction, not the individual is held responsible. There should be some accountability for the faction without a doubt. However, when an entire faction is threatened with having the entire faction's status change in three different houses because someone in a faction did something he was told not to do it kind of kills the desire for anyone else to want to smuggle. It's a shame because it used to be one of my favorite things to do.