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New York regulators on Wednesday charged the National Rifle Association with violation of the state’s insurance laws by allegedly acting as an unlicensed insurance broker in marketing and endorsing its insurance programs for gun owners.
The charges filed by New York’s Department of Financial Services follows the regulator’s $7 million settlement in May 2018 with Lockton Cos. LLC, which administered programs that provided liability insurance to members of the Fairfax, Virginia-based gun rights advocacy group.
According to the notice of hearing and statement of charges, the NRA has worked with Lockton since 2000 to endorse and market gunowners’ liability coverage, including the Carry Guard program launched in 2016.
“In return for its participation in these programs, the NRA receives substantial compensation, including in the form of ‘royalties’ that are based upon a percentage of the insurance premiums paid by its members,” the charge statement said.
The payments to the NRA varied between 13.67% and 21.92% and the organization received more than $1.8 million from Lockton for New York sales between 2000 and 2019, the statement said.
“The NRA’s participation in endorsing and marketing the insurance programs, along with its receipt of compensation from those activities, means that the NRA has been acting as an insurance producer, thus requiring it to be licensed and regulated by the department. Despite this, the NRA is not now, and has never been, licensed by the department in any capacity with respect to insurance,” the statement said.
The coverage offered, which includes defense costs incurred after the “purposeful use of the firearm,” is barred under a provision in New York law stating that, with some exceptions, insurance cannot cover intentional acts or criminal defense costs, according to the statement.
In addition, many of the programs were placed in the excess market in violation of New York’s excess lines insurance rules, the charges say.
Lockton and the NRA created the Carry Guard program in 2016 and sold about 680 policies in New York between April 1, 2017, and Nov. 17, 2017, before the program was discontinued in the state, the statement said. The policies were underwritten by an excess and surplus lines unit of Chubb Ltd. Chubb settled charges filed by New York regulators for $1.3 million in 2018.
The regulator is seeking to impose civil monetary penalties on the NRA for the alleged violations.
The NRA did not immediately return a call seeking comment.
The New York state attorney general filed a motion in federal court Friday seeking to dismiss a suit filed by the National Rifle Association for allegedly violating the gun rights organization’s First Amendment rights and threatening its existence by putting pressure on insurers and banks doing business with the group.