Insurance Commissioner Allen Kerr's past business gets scrutiny | Arkansas Blog

Monday, August 10, 2015

Insurance Commissioner Allen Kerr's past business gets scrutiny

Posted By on Mon, Aug 10, 2015 at 9:20 AM

click to enlarge TERMINATED: Farmers Insurance terminated Kerr as an agent but the Insurance Department cleared him of impropriety in a proceeding now being criticized in an unrelated court case.
  • TERMINATED: Farmers Insurance terminated Kerr as an agent but the Insurance Department cleared him of impropriety in a proceeding now being criticized in an unrelated court case.
Thanks to a court case, Arkansas Business has developed information about a long-simmering story  — that Allen Kerr, now the state insurance commissioner, got special handling by then-Insurance Commissioner Jay Bradford in a dispute with Farmers Insurance, which had terminated Kerr as an agent when he was still a member of the legislature.

The subject arises in a court case by an insurance agent who lost his license and is represented by Mike Pickens, himself a former insurance commissioner.

Mark Friedman at Arkansas Business quotes from Picken's pleading:

“Allen Kerr received unprecedented and highly unusual preferential treatment due to his position as a sitting legislator at the time Farmers terminated him for cause,” Pickens said in a June court filing.

The fact that Kerr was allowed to keep his license after Farmers accused him of serious infractions shows “the fundamental unfairness, and arbitrary and capricious nature of the [AID’s] hearing process and procedures,” Pickens wrote.

Farmers, which accused Kerr of understating risks when writing a number of commercial policies, ultimately agreed to a fine ordered by Bradford for the way it handled Kerr’s termination and that of another agent.

Kerr and Bradford say the case was handled properly. Gov. Asa Hutchinson, who appointed Kerr, a former legislator, to the position, said he had reviewed the file and believed Kerr had been exonerated. Pickens disagrees. (By the way, Kerr stopped talking to the Arkansas Times when we began inquiring about the end of his relationship with Farmers in 2011 and the Insurance Department similarly wouldn't discuss the case at the time.)

Pickens said an independent hearing officer, not Bradford, should have heard the Kerr case. 

Arkansas Business has dug into Insurance Department files to find the source of the dispute between Farmers and Kerr. He apparently represented as a "fine dining" restaurant Cregeen's Pub, for which Farmers was asked to pay $1 million to settle a claim over a drunk driver who'd been served at the company's pub in Jonesboro and another establishment.

Kerr wouldn’t release details about the claim to Arkansas Business. But in a Sept. 8, 2011, email included in the case file, Kerr told Charlie Snyder, then the state executive director for Farmers in Arkansas, that he did not intend to mislead the carrier about the nature of the business.

“The word ‘Pub’ does appear on the written and signed application, however, I took this as part of the theme of the restaurant and not that it was going to be a bar,” Kerr wrote in the email.

A day later, Snyder asked his supervisor in Los Angeles for permission to terminate Kerr.

“Based on the information that I have reviewed, there is a trend of misrepresentations throughout his commercial book of business regarding business risk types, square footage, age of dwellings, and the type of construction and placement of coverage unacceptable to the Companies,” Snyder wrote on Sept. 9, 2011.

Snyder also said he found 78 misrepresentations in 406 policies. Kerr’s commercial policies “appear to be improperly rated versus what should have been charged. This would cause the company to be exposed to risks that we were not receiving the correct premium,” Snyder wrote.

The case grew complicated because Farmers misstated the reason for terminating Kerr in its original letter (related to fees). He contends they did full reviews of all his business and he was a good agent. The Insurance Department ruled in his favor in mid-2012. This, by the way, was a time when the Insurance Department was deep in the push by the Beebe administration to pass the private option Medicaid expansion. In 2013, on the critical House vote, Republican Kerr sided with Beebe. He was a no in 2014, when the outcome was not in doubt.

Kerr sold his agency in 2013. He says he'll recuse from any Farmers matters before his department.

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