This story was published in partnership with the Trace.
It takes hundreds of millions of dollars each year to keep the National Rifle Association’s enormous operation going, and the gun group has been creative about tapping new pots of revenue. One of those is insurance. Over the last two decades, the NRA has sold policies covering liability for shooting instructors, or property damage to firearms. Most recently, and with much fanfare, it rolled out Carry Guard, a program through which gun owners could seek reimbursement for legal costs arising from self-defense shootings. For more than 17 years, the NRA’s partner on those ventures was the Lockton Companies, which bills itself as the world’s largest privately held insurance brokerage.
Now Carry Guard has blown up in the NRA’s face. This spring, regulators in New York State declared the product unlawful. The insurance broker and underwriter Chubb signed agreements not to market any other NRA-branded product in the state. Governor Andrew Cuomo and the state’s Department of Financial Services cited the blow to Carry Guard when warning other banks and insurers to weigh the reputational risks of doing business with the country’s top gun lobbying organization. In a lawsuit, the NRA has accused New York officials of carrying out a political crusade under the guise of industry oversight. In a filing that made news last week, the NRA claimed that the state’s actions imperil its very existence.
The NRA and Lockton have also taken their own messy divorce to court in a separate suit. That battle is notable for what it reveals about the extent of the gun group’s current isolation.
In the NRA’s depiction, Lockton failed the gun group, which trusted the broker not to run afoul of local laws when devising and marketing insurance. Lockton breached its contract, the NRA alleges, when it caved to New York’s bullying and ended a longstanding “mutually beneficial” relationship. In its own filings, the insurance firm puts its decision to sever ties in a different light. Lockton argues that the NRA brought the troubles on itself, by amping up its rhetoric to the point of radioactivity.
“The NRA’s own overtly political and inflammatory approach” to marketing, “as well as its provocative public stances, have resulted in a shift in the enforcement priorities of insurance regulators and heightened scrutiny,” Lockton said in a counterclaim filed in June, which the Trace is reporting on here for the first time. It was the NRA, Lockton adds, which put its insurance products “within this broader political maelstrom.”
When New York regulators cracked down on Carry Guard, they concluded that the product broke state laws against insuring people who deliberately harm others and slapped the NRA for marketing Carry Guard and 11 other insurance products without the necessary license. In May, Lockton signed a consent agreement with New York, paying a $7 million fine and promising not to participate in Carry Guard or promote any other NRA insurance products in the state.
After Lockton settled with the state, the NRA sued Lockton for breach of contract. By signing the consent agreement, “Lockton ceased to protect the NRA and its interests,” the gun group alleged. “Instead, Lockton chose to abet the DFS blacklisting campaign in order to save itself.”
In its counterclaim, Lockton stresses that it merely ran Carry Guard’s back end, while the NRA handled the marketing, which was inseparable from the group’s political advocacy. The broker blames both the gun group and its public relations and advertising agency, Ackerman McQueen, for the divisive tilt of those pitches. For three decades, Ackerman has played an outsize role in the NRA’s messaging, constantly pushing the organization to new extremes. It produces the various programs that appear on NRATV, and in 2016 took in over $21 million from the gun rights group. For some NRA employees, the firm is a sore point; they are concerned that Ackerman consumes too much of the budget, and that its actions at times run counter to the NRA’s best interests. It was Ackerman that helped conceive Carry Guard as a way for the NRA to elbow into a burgeoning market for self-defense insurance.
From Lockton’s suit:
“[The NRA and its public relations firm Ackerman McQueen] created an inflammatory marketing campaign concerning certain of the NRA-Endorsed Programs, including Carry Guard, designed to maximize political controversy in the United States and thereby increase NRA membership and sales of insurance coverage, from which the NRA derived revenues.”
As Lockton’s attorneys note, the gun group also spent heavily on digital ads in the week after the Parkland shooting, and saw new memberships and donations spike over the next several months. The complaint cites the NRA’s public claims that it successfully recruited 100,000 new members after the shooting and topped six million members. To some, including Cuomo, the effort created the appearance that the NRA was trying to capitalize on a national tragedy, which only escalated the regulatory scrutiny.
Over the nearly two decades that Lockton worked with the NRA, it administered at least 11 different insurance programs marketed to the group’s members. The relationship was a boon for the NRA, and seemingly for the broker, as well. According to court documents, last October, Lockton and the NRA agreed to an updated contract under which Lockton would pay the NRA a flat rate of $600,000 per month through March 31 of this year. The consent agreement also noted that in the preceding 18 years, the NRA earned $1.87 million from insurance program revenues in New York alone.
New York’s pressure sundered deep personal ties. The broker’s chairman, David Lockton, is a member of the Golden Ring of Freedom—an elite club for those who donate a million dollars or more to the NRA. Four years ago, he was photographed at a Ring of Freedom event. In the picture, he and a dozen other members are gathered in a group, donning the customary gold jackets that signify high status in the gun rights movement. Lockton stands at one end, beaming at the camera.
Less than two weeks after Parkland, David Lockton made a “distraught” phone call to the gun group, according to the NRA’s suit against New York officials. He explained that while the firm would prefer to go on working with the NRA, it had no choice but to “drop” the group entirely.
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