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NRA sues Lockton over insurance program

NRA sues Lockton over insurance program

The National Rifle Association sued Lockton Cos. L.L.C. on Friday, charging the broker breached its agreement to run an NRA-branded insurance program.

The complaint, National Rifle Association of America vs. Lockton Affinity Series of Lockton Affinity L.L.C. and Kansas City Series of Lockton Companies L.L.C., was filed in federal court in the Eastern District of Virginia just days after Lockton agreed to pay $7 million to New York regulators to settle charges that its “Carry Guard” program violated state law and breached excess and surplus lines placement rules. On Monday, Chubb Ltd., which underwrote the program, paid $1.3 million to settle similar charges.                                             

The New York State Department of Financial Services said the program, which was administered by the brokerage’s Lockton Affinity L.L.C. unit, unlawfully provided liability insurance to gun owners.

The program covers acts of intentional wrongdoing and improperly provided coverage for criminal defense for any act of self-defense covered under the policy for gun owners and their resident family members who may be charged with a crime involving a firearm, regulators said.

“Rather than acting to defend the NRA, and actively advocate to protect its interests,” the NRA complaint said, “Lockton Affinity breached its duties by, among other things, putting its own interests ahead of the NRA and proceeding to pursue and negotiate a settlement with DFS to protect itself.”

“It did so without full disclosure of material facts to the NRA,” the complaint continued, “and irrespective of the detrimental impacts and effect of its undisclosed agreement on the NRA, its members, and the insurance program.”

The NRA alleges it suffered “tens of millions of dollars in damages” as a result of Lockton’s actions, including reputational damage, lost goodwill, lost revenue from the insurance program and legal expenses.

From roughly January 2000 through March 2018, Lockton and the NRA offered at least 11 insurance programs to NRA members in New York and elsewhere.

According to the complaint, New York officials targeted the NRA program for political motives.

The NRA said an organization called “Everytown for Gun Safety” had “conceived and openly orchestrated regulatory inquiries concerning NRA-endorsed insurance products marketed and administered by Lockton.”

In April, Financial Services Superintendent Maria T. Vullo issued a memo where she said the department “encourages its insurers to continue evaluating and managing their risks, including reputational risks, that may arise from their dealings with the NRA or similar gun promotion organizations, if any, as well as continued assessment of compliance with their own codes of social responsibility.”

“In the face of this politically motivated coercion,” the complaint said, “Lockton should have honored its fiduciary obligations and longstanding business relationship with the NRA and taken full responsibility for any compliance related concerns. Instead, via Twitter on February 26, 2018, Lockton publicly and abruptly announced that it would cease providing services to the NRA.”

“Simply put, Lockton ceased to protect the NRA and its interests,” the complaint said. “Instead, Lockton chose to abet the DFS blacklisting campaign in order to save itself.”

A Lockton spokesman said in an email Monday that “it is not appropriate for us to comment on pending litigation.” The New York State Department of Financial Services declined to comment on the lawsuit and Everytown for Gun Safety did not respond to messages seeking comment.

The complaint said that Lockton did not rescind any comparable or identical insurance-marketing guidance it provided to clients who were not “gun promotion organizations.”