Yes, the use of insignias on the Armadas has been used before, but not in recent history. The first recorded case would be back when the factions were first forming after the Great Flood and everything was still in disarray. Back then it was more for an obvious symbol of who belonged to which faction, especially since loyalty and identity to their side was a lot more significant than it is now. Once things settled and the official treatises made between the Armadas were made, the insignias were considered obsolete and removed.

Of the very small number of times the insignias appeared, it was always related to so some kind of divisive conflict between the two that required clear identity of Armada members until peace returned again. The last known record was several hundred years ago.

There is no mention of a "punishment" type of effect with the insignias. Whether that's accurate or not... Well, who knows.