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.”

San Jose Mayor Proposes “Gun Liability Insurance”

Sam Liccardo is the mayor of San Jose, California. He proposed that gun owners living in the city must buy gun liability insurance or pay a fee “to cover the emergency response and medical care for victims of ‘gun violence’ (sic).” San Jose would be the first city in the United States to require such insurance for the exercise of an enumerated civil right.


As reported by Insurance Business Magazine:

He likened his proposed mandatory gun liability insurance to state-enforced auto insurance requirements, stating: “We see in the context, for example, of auto insurance, how insurance can provide a motivator for safe conduct […] Similarly, we could do the same with gun ownership — how you might reduce your premium, for example, by taking a gun safety course or by having a gun safe or by ensuring that you only have guns with child-safe locks.” …

In the interview with FOX Business, Liccardo said the insurance is not intended to “seek [out and] identify all the gun owners” in the city. Rather, he hopes it will address the significant cost of gun violence to California taxpayers.

He said: “All public costs for everything from emergency response to emergency room treatment — all the costs that result from the human harm of gun violence. It seems to me that those costs should be properly allocated and distributed. Insurance is one way of doing that.”

In essence, what Mayor Liccardo is seeking to do is impose a tax on the right of self-defense paid for by the law-abiding. This becomes much clearer when you read the actual key elements of his plan from the city’s website.

These include:

  1. Liability insurance to cover negligent discharges and “for the intentional acts of third parties who steal, borrow, or otherwise acquire the gun.
  2. If insurance is not available, then it would be a per-household fee for gun owners to participate in a public compensation pool.
  3. A gun and ammunition tax which he hopes becomes a regional tax.
  4. A “consent to search” plan in conjunction with the SJPD involving parental permission to search homes and confiscate firearms owned by dependents.
  5. A bounty program for anonymous tipsters who identify “unlawful possessors” of firearms.
  6. Legislative advocacy to promote his liability insurance plan for state-wide adoption.

For perspective on this from the insurance industry I went to the Insurance Information Institute to see what they had to say about “gun liability insurance”. They note first that insurers rarely offer separate “gun liability insurance”. A person would have some coverage for non-intentional acts from their homeowner’s insurance as well as from any supplemental or umbrella liability policies. This would cover negligence but might not cover acts of self-defense. Coverage for Mayor Liccardo’s “intentional acts of third parties” would most certainly not be covered.

Coverage for firearms is usually mentioned only in the property section of a homeowner’s policy. Since firearms are not mentioned in the liability section, it is implied that since it is not excluded that it would be covered.

There are exclusions:

Not all accidents are covered, per the terms of the policy. For example, if a relative living at the same home were accidentally shot, the accident would not appear to be covered.

The policy explicitly says it will not cover “expected or intended injury.” The policy is designed to cover accidents, not intentional, criminal actions, such as a homicide or an attempted homicide. A mass shooting would not appear to be covered. A critical point is that covering an intentional, illegal act like armed assault would violate standard underwriting principles.

Although acts that are intended or expected to cause harm are generally excluded, some policies restore coverage in cases where bodily injury or property damage results from the use of “reasonable force” by an insured to protect persons or property.

The Insurance Information Institute goes on to say you might get coverage through a group personal coverage policy with someone like, you know, the National Rifle Association. The unintended consequence of Mayor Liccardo’s attempt to kill gun ownership and, by extension, the gun culture could be an exponential growth in the number of NRA members in his community. I’ll bet you he didn’t consider that when he made this proposal!