New Jersey Investigating NRA-Sponsored Carry Guard Insurance

By Elizabeth Blosfield | August 22, 2018

The New Jersey Department of Banking and Insurance is investigating the marketing and sale in New Jersey of insurance sponsored by the National Rifle Association for potential violations of state insurance laws.

The Department is examining Overland Park, Kansas-based Lockton Affinity LLC as the insurance broker for potential violations related to the marketing and sale of NRA-sponsored insurance under the “Carry Guard Program.” It is also examining Chicago-based Illinois Union, a member of the Chubb group, for potential violations in its role as the underwriter of the insurance product.

“Lockton Affinity has received an inquiry from the state of New Jersey,” a company spokesperson said in an emailed statement to Insurance Journal. “We take compliance matters seriously and will work with state regulators to address any concerns. Lockton has been in business for more than 50 years, and our commitment to regulatory compliance and doing what’s best for our clients is unwavering.”

The NRA Carry Guard Insurance Program is advertised as personal firearms liability insurance, including self-defense insurance, for those who lawfully carry firearms and their families, including protection against civil liability, the cost to defend against civil and criminal legal actions and immediate access to attorney referrals. The coverage is advertised as including supplementary payments as needed for bail and criminal defense legal retainer fees, among other costs.

“New Jersey law requires insurance companies selling to residents within the state to comply with specific requirements,” said Department of Banking and Insurance Commissioner Marlene Caride in a press release issued by the Department. “The Department has reviewed findings by the New York Department of Financial Services associated with the marketing and sale of Carry Guard insurance in New York and is examining the marketing and sale of this product in New Jersey to determine if, and to what extent, this activity violated state insurance laws,”

Indeed, The New York Department of Financial Services (DFS) in May fined Chubb Ltd. and its subsidiary, Illinois Union Insurance Company, $1.3 million for underwriting the National Rifle Association (NRA)-branded Carry Guard insurance program in violation of New York insurance law, as reported by Insurance Journal.

Through a consent order with DFS regarding the Carry Guard program, Chubb previously consented to certain violations of New York law governing the sale of policies in the state’s excess lines market, according to a previously emailed Chubb statement.

“Chubb recognizes its responsibility to ensure that its policies comply with New York law,” according to the statement. “Chubb at all times intended and believed its coverage to be in full compliance with New York law. Chubb believes that this settlement is the best way to resolve the coverage questions raised by the department and is fully committed to cooperating with the department to remediate any issues or concerns regarding the Carry Guard program.”

The Chubb settlement came after Insurance Journal also reported in May that insurance broker Lockton would pay a $7 million fine for administering the Carry Guard program through its Lockton Affinity subsidiary, which is a licensed excess line broker in New York. The settlement with Lockton was considered the first in New York regulators’ broader investigation of the matter.

Among the findings in the New York Carry Guard investigation was that the NRA, which does not have a license from NYDFS to conduct insurance business in New York, actively marketed and solicited for the “Carry Guard” program through a website, email and direct mail, among other channels.

“As the NRA has previously stated, it acted appropriately at all times,” said William A. Brewer III, partner at Brewer, Attorneys & Counselors and counsel for the NRA, in a previously emailed statement regarding the Chubb consent order. “The NRA relied upon Lockton and its assurances that the Carry Guard program complied with all applicable state regulations.”

In an amended version of a federal lawsuit filed in May, the Virginia-based NRA said it lost insurance coverage after New York’s enforcement actions against companies underwriting Carry Guard. It said the Cuomo administration was persuading other insurers to avoid doing business with the NRA. Cuomo has said the state is filing a motion to dismiss the lawsuit.

The NRA is not licensed to sell insurance in New Jersey. In a preliminary investigation by the New Jersey Department of Banking and Insurance, it found that Lockton marketed and sold Carry Guard insurance (certificates) to New Jersey residents, and that coverage remains in force in the state. The Department has contacted both Lockton and Illinois Union.

The New Jersey Department of Banking and Insurance is also investigating the marketing and sale in New Jersey of other firearm-related insurance programs for potential violations of state insurance laws.

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About Elizabeth Blosfield

Elizabeth Blosfield is the East region editor at Insurance Journal.

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