NY Department Of Financial Services Files Charges Against NRA

The New York State Department of Financial Services has charged the National Rifle Association with violating the state’s insurance laws. The NRA is accused of acting as an unlicensed insurance broker. DFS is seeking civil penalties as well as injunctions against the NRA.

From their press release issued today:

The Department of Financial Services (DFS) today announced that it has served a statement of charges against the National Rifle Association (NRA). The Department alleges that the NRA, which does not have a license to conduct insurance business in New York, violated various New York State Insurance Laws, among other things by acting as an insurance producer without a license in endorsing and marketing insurance programs, including “Carry Guard.” DFS also alleges that the NRA engaged in misleading marketing practices, deceiving its members. The Department is seeking civil monetary penalties, as well as injunctive and other appropriate relief.

In the statement of charges announced today, DFS alleges that, since 2000, the NRA has worked with the Kansas City Series of Lockton Companies LLC (Lockton) to offer a variety of insurance products to NRA members, their families and affiliated businesses. According to the statement of charges, the NRA endorsed the programs as well as marketed them to its members through NRA-affiliated websites and email marketing, despite the fact that the NRA does not hold an insurance producer license from DFS. In return, the NRA received substantial compensation, including royalties based on a percentage of the insurance premiums paid by its members. An entity is required to be licensed by DFS to engage in these activities related to the sale and marketing of insurance products in New York State.

DFS alleges that not only did the NRA act as an “unlicensed insurance broker” with regard to its Carry Guard product, the insurance itself was unlawful. According to the DFS, since a self-defense shooting is an intentional act, it cannot be covered under the state’s insurance laws.

The complaint does not limit itself to Carry Guard. It goes on to include other insurance offerings such as liability insurance for ranges and instructors and theft insurance for gun collectors.

The charges are not confined to the Carry Guard program. DFS alleges that the NRA participated in soliciting its members with respect to many other insurance products, going back to approximately 2000. For example, the charges allege that the NRA participated in offering its members insurance products involving 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 the NRA participated in the generation of more than 28,000 such policies for New York consumers and allege that the NRA unlawfully received royalties of about $1.8 million between 2000 and 2018 from Lockton on such policies in New York.

In addition, DFS alleges that the NRA misrepresented that the insurance offerings to its members was at the lowest cost possible, when in fact the NRA was taking for itself substantial royalties, sometimes more than 20 percent of the premiums paid.

The Department of Financial Services is seeking up to a $500 penalty for each of the 28,000 policies issued to New York residents.

A hearing is set for April 6th in Manhattan on these charges.

The full complaint can be found here.

The NRA responded through their outside counsel William Brewer III:

“Today’s announcement is about politics, not protecting consumers,” William Brewer, a lawyer for the NRA, said in a statement. “The NRA acted appropriately at all times.”

Brewer goes on to say:

Brewer said the NRA did not underwrite, sell or administer insurance programs, and “like countless other affinity groups … relied on insurance-industry experts to oversee and market products tailored for its members.”