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2. NRA insurance program triggers controversy

Posted On: Dec. 26, 2018 7:00 AM CST

2. NRA insurance program triggers controversy

The flurry of business decisions and lawsuits in a multisided battle involving an insurer, a brokerage, the National Rifle Association and the state of New York earned the controversy the No. 2 spot in Business Insurance’s most read stories of 2018.

The dispute began when Chubb Ltd. said in February that it would no longer participate in a National Rifle Association insurance program called NRA Carry Guard. The program provides coverage for gun owners who face legal or other costs related to self-defense shootings.

Although the announcement came only days after the mass shooting at Marjory Stoneman Douglas High School in Parkland, Florida, which killed 17 students and staff, Chubb said it had provided notice of its intent to discontinue participation in the program three months earlier. Kansas City, Missouri-based Lockton Cos. LLC, which administered the program, also announced that it would no longer participate in it. And MetLife Inc. announced it was severing ties with the Fairfax, Virginia-based NRA, saying on Twitter: “We value all our customers but have decided to end our discount program with the NRA.”

The moves came as the New York Department of Financial Services, which regulates insurance in the Empire State, continued an investigation of the program that it had launched in 2017. The investigation concluded the NRA insurance program unlawfully provides liability insurance to gun owners for acts of intentional wrongdoing, and improperly provides legal services insurance for costs and expenses 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 legally possessed firearm, according to a DFS statement.

Chubb Ltd. agreed in May to pay a $1.3 million fine for underwriting the Carry Guard insurance program, through Lockton Affinity, in violation of New York state law.

The penalty against Chubb and its Illinois Union Insurance Co. unit followed an agreement by Lockton to pay $7 million to settle similar charges for administering the program.

Lockton also agreed not to participate in the Carry Guard insurance program or any similar program in New York and to stop providing Carry Guard or similar insurance policies for or to New York residents regardless of where they are written.

In the meantime, Lloyd’s of London directed syndicates in the market to stop covering insurance programs associated with the NRA.

Payment of the fines did not end the disputes, though. The NRA filed a federal lawsuit against Lockton for failing to maintain the program and also sued the state of New York, alleging that the state’s actions violated its First Amendment rights.

The controversy entered a new phase in September when the California Department of Insurance issued a cease-and-desist order to the NRA, alleging that the NRA marketed an insurance product in California without a license.