The consent order follows a three-year investigation.
The National Rifle Association on Wednesday agreed to pay $2.5 million to resolve claims it violated New York insurance laws.
The consent order follows a three-year investigation by the state’s Department of Financial Services. It requires the NRA to stop doing insurance business in New York for five years.
DFS said the NRA acted as an insurance producer without a license by soliciting and marketing the sale of insurance products.
“The NRA operated as an unlicensed insurance producer and broke the New York Insurance Law by soliciting insurance products and receiving compensation,” DFS Superintendent Linda Lacewell said in a statement. “Even worse, the NRA violated the New York Insurance Law by soliciting dangerous and impermissible insurance products, including those within its Carry Guard program that purported to insure intentional acts and criminal defense costs.”
The NRA endorsed certain insurance products offered by Lockton Affinity in exchange for “substantial compensation,” investigators said.
According to the consent order, more than 28,000 NRA-endorsed policies were placed in New York through Lockton, including the “Carry Guard” insurance program.
Between about April 1, 2017, and Nov. 17, 2017, Carry Guard was marketed and sold throughout the United States, with about 680 policies issued to New York residents.
In the consent order, DFS found that the Carry Guard program offered coverage that is unlawful in New York state, namely coverage for losses and costs associated with the aftermath of the purposeful use of the firearm, including defense costs in a criminal prosecution. Under New York law, intentional acts cannot be insured.
Lockton Affinity was fined $7 million as part of the same investigation.
In August, New York Attorney General Letitia James filed a lawsuit against the NRA, seeking to dissolve the powerful gun lobby for a multitude of alleged violations of state law governing charities. The civil lawsuit, filed in Manhattan Supreme Court, also named NRA CEO Wayne LaPierre and three other NRA executives – Wilson “Woody” Philips, John Frazer and Joshua Powell – as defendants.
“The NRA’s influence has been so powerful that the organization went unchecked for decades while top executives funneled millions into their own pockets,” James said. “The NRA is fraught with fraud and abuse, which is why, today, we seek to dissolve the NRA, because no organization is above the law.”
The NRA quickly filed a countersuit against the attorney general.