The National Rifle Association has signed a consent order with the New York State Department of Financial Services, which settles charges that the NRA had illegally sold insurance to NRA members living in New York state.
Linda A. Lacewell, the state”™s superintendent of financial services made the settlement announcement this morning. Under terms of the consent order, the NRA will pay New York a civil penalty of $2.5 million for violating state insurance laws by selling insurance without a license to do so.
A three-year investigation found that licensed insurance companies worked with the NRA and those companies were fined. Lockton Cos. and its affiliate Lockton Affinity received a $7 million fine for serving as the producer and administrator of various NRA-branded insurance products.
Certain underwriters at Lloyd”™s of London were fined $5 million for underwriting NRA-branded insurance products. Chubb subsidiary Illinois Union Insurance Company was fined $1.3 million for underwriting a program sold by the NRA called Carry Guard.
The settlement announcement said that Carry Guard insurance was promoted by the NRA as providing “a cutting-edge set of features that will help gun owners mitigate the potentially costly financial and legal consequences flowing from armed encounters.”
The NRA website described the program as “the only membership carry program developed and supported by the National Rifle Association.” The website also stated that Carry Guard was “created and endorsed by the NRA.”
Lacewell said, “The NRA operated as an unlicensed insurance producer and broke the New York Insurance Law by soliciting insurance products and receiving compensation. Even worse, the NRA violated the New York Insurance Law by soliciting dangerous and impermissible insurance products, including those within its Carry Guard program that purported to insure intentional acts and criminal defense costs.”
The state found that Carry Guard offered up to $1 million of insurance protection against civil lawsuits; immediate access to supplemental funds for bail, attorney retainer fees and other criminal defense costs; up to $150,000 in criminal liability reimbursement upon an acquittal; and automatic protection for a spouse at no extra cost.
NRA was to receive compensation that included, among other things, a royalty amount of 21.92% of the premium paid by NRA members who purchased Carry Guard insurance, along with certain profit-sharing revenues.
Lacewell”™s announcement said that from 2000 to 2018 the NRA worked with Lockton to offer a variety of insurance products to NRA members, their families and affiliated businesses in New York. More than 28,000 NRA-endorsed policies were placed in New York through Lockton.
In addition to the civil penalty, the consent order bans the NRA from marketing insurance in the state or receiving compensation in connection with any newly-issued New York insurance policies for five years, irrespective of whether the NRA obtains a license to sell insurance.
It also cannot permit the use of its name or logo in marketing, soliciting or participating in any activity involving newly placed insurance policies in New York state or receive any compensation whatsoever for insurance policies placed in New York state.
