Last week, New York's Department of Financial Services announced that the National Rifle Association, the NRA, has agreed to a five-year ban on participating in insurance business in New York State, and will pay a $2.5 million civil fine in order to settle charges that it offered insurance coverage to NRA members without an insurance license and also concealed how it routinely kept premiums for its own benefit.
The announcement came more than three months after state Attorney General, Letitia James, sued to dissolve the group, accusing it of widespread corruption. The agreement resolved charges related to the NRA's long-standing relationship with insurance broker Lockton Companies Inc., the world's largest independent insurance brokerage, including the sale of over 28,000 insurance policies to citizens of New York, and the NRA's receipt of more than $1.8 million of royalties and fees from Lockton.
New York State's Insurance Superintendent, Linda Lacewell, said that the Lockton "Carry Guard" insurance program, which carried NRA branding, illegally provided coverage for criminal defense costs and the intentional use of firearms in shooting incidents. Lacewell also accused the NRA of misleadingly promising coverage at the "lowest possible cost," when in actuality between 13.7 percent and 21.9 percent of the premiums paid were kept by the NRA instead of used for business purposes.
Representatives for the NRA have previously said that the NRA did not underwrite or administer insurance programs, and instead relied on industry experts to market insurance products for NRA members, a model that they claim is used by "countless" affinity groups.
Lockton was fined $7 million by the New York Financial Services Department over its involvement with the Carry Guard product.
Editor's Note: Most, if not all, insurance policies exclude coverage for criminal activities and for intentional acts from the viewpoint of the insured. State regulators have asserted that Carry Guard violated state law which prohibits insurance carriers from providing coverage for insureds who inflict bodily harm upon another.
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