New York Charges NRA With Violating State Insurance Laws

By Janita Kan
Janita Kan
Janita Kan
Janita Kan is a reporter based in New York covering the Justice Department, courts, and First Amendment.
February 6, 2020Updated: February 6, 2020

A New York regulator has filed civil charges against the National Rifle Association (NRA), alleging that the organization violated numerous state insurance laws and deceived its members through its marketing.

The New York Department of Financial Services (DFS) announced Feb. 5 that it had served a statement of charges against the gun rights group, accusing it of acting as an unlicensed insurance producer by endorsing and marketing insurance products such as the NRA “Carry Guard” and engaging in “unfair and deceptive” marketing practices that “deceived” its members.

The Carry Guard program, which was distributed by insurance broker Lockton, was rolled out in 2017 and quickly drew the attention of state regulators.

The NRA denies the allegations, saying that it acted appropriately at all times.

“The NRA did not underwrite, sell, or administer any insurance programs, period. Instead, like countless other affinity groups, the NRA relied on insurance-industry experts to oversee and market products tailored for its members,” William A. Brewer III, counsel to the NRA, told The Epoch Times in an emailed statement.

“The New York Bar Association and Habitat for Humanity have similar programs. None of those other groups have been targeted by DFS—because today’s announcement is about politics, not protecting consumers.

“The NRA believes it has been singled out to weaken gun-rights advocacy in New York. Undeterred, the NRA will fight for its mission and millions of loyal members.”

In 2016, the NRA worked together with Lockton to create the Carry Guard insurance program, according to regulators. The program was marketed and sold throughout the United States, and between April 1, 2017, and Nov. 17, 2017, about 680 policies were issued to New York residents.

A DFS investigation in 2018 found that the Carry Guard program had provided liability insurance unlawfully to gun owners “for certain acts of intentional wrongdoing” and for “improperly” providing insurance 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.”

Lockton agreed to pay $7 million in fines at the time for serving as the administrator of the insurance program.

The NRA is now being charged for endorsing the insurance programs and marketing them to its members through its websites and emails, despite not holding an insurance producer license from the DFS, according to the statement of charges (pdf). The regulators said that in return for the marketing, the group received “substantial compensation,” including royalties that were based on a percentage of the insurance paid by its members.

The DFS states that in order to engage in the sale and marketing of insurance products, entities are required to be licensed by the regulator.

Moreover, the regulator alleges that the NRA violated state insurance laws because the Carry Guard program offered “coverage for losses and costs associated with the aftermath of the purposeful use of a firearm, including defense costs in a criminal prosecution,” which can’t be insured under New York laws.

The regulator also accuses the group of misrepresenting to its members that the insurance products were sold at the lowest cost possible, when, in fact, the group was taking substantial royalties, at times exceeding more than 20 percent of the premiums paid, according to the statement of charges.

The charges aren’t confined to the Carry Guard program, the DFS said. The regulator alleges that the NRA also offered other insurance products without a license dating back to 2000, including coverage for firearms instructors, gun collectors, gun clubs, gun shows, federal firearms dealers, and other aspects involving firearms, as well as life, health, and property offerings for their members.

The charges allege that in total, the NRA participated in offering more than 28,000 such policies to New Yorkers and had “unlawfully” received royalties of about $1.8 million between 2000 and 2018 on the policies in the state.

The DFS is seeking fines and other remedies in their action. A hearing is scheduled for April 6.

The NRA sued the DFS and Gov. Andrew Cuomo in 2018, accusing them of engaging in a “blacklisting campaign” that aimed at stopping banks and businesses from doing business with the gun rights group. A federal judge dismissed part of the suit but allowed the case to stay alive on First Amendment grounds.

The NRA claimed that the state had violated its First Amendment rights by seeking to chill the group’s political speech, when Cuomo issued a press release announcing that he was going to direct the DFS to urge companies to review their relationships with the NRA and other gun rights groups. Then-superintendent of the DFS, Maria Vullo, backed the governor by issuing “guidance letters” (pdf).

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