Bart Newman was gobsmacked.
He said he’d been working with the Arkansas Insurance Department for weeks on a plan to rescue Alliance Insurance Group, where he has worked as an insurance agent since selling his Hot Springs insurance agency to Alliance owner Berry Bishop four years ago.
Then he learned from an Arkansas Business report that Insurance Commissioner Allen Kerr had suspended Alliance’s license, and Bishop’s, in an emergency order Tuesday morning, leaving Newman and three other producers unsure exactly what services they can provide to existing clients until they get a new agency set up – which they hope will be this week.
As Arkansas Business reported, Kerr’s order alleges that Bishop converted some $1.7 million in premium received from customers to his personal use and received more than $1 million from the Bank of Prescott by creating phony premium finance agreements.
Newman said he first discovered “strange things” in Alliance’s accounts receivable about seven weeks ago and, after some investigation and a confrontation with Bishop, he reported his suspicions to the AID in the third week of March.
By then, Bishop had already agreed to a plan for his son-in-law, Nathan Price, to buy Alliance’s main office in Arkadelphia and a satellite office in Prescott and for Newman and two other agents, Ryan Browning and Ronnie Ralph, to buy the Hot Springs office.
The letter of intent, dated March 15, offered an amount equal to Alliance’s 2017 commission revenue on premium of about $15 million. (At an industry average commission of 12-13 percent of premium, that translates to a sales price of $1.8 million-$2 million.)
The proceeds of the sale, Newman said, would have been used to pay carriers who were due premium that had been received by Alliance but not remitted. “No one’s insurance coverage has lapsed or been canceled,” Newman emphasized. “Everyone’s insured.”
But the future of Alliance Insurance Group and its 21 employees was not as clear on Tuesday afternoon. Newman was still willing to buy the agency, “but I’ve got to have some cooperation from the Insurance Department.”
Newman said he and the other prospective buyers had insisted that Bishop stay away from the business while he worked “13 hours a day” to fix the mess. In his order, Kerr said that with Bishop “no longer in active control or management of Alliance Insurance Group” it was “unclear under what authority the remaining employees are making managerial and financial decisions.”
Ryan James, spokesman for the Insurance Department, declined to comment about the Alliance case other than to encourage the agency’s customers to contact their insurance carriers or the AID’s Consumer Services Division with any questions.
He also said that a licensed insurance agent with an appointment from a carrier can sell policies without being affiliated with an agency. Newman said he and his co-workers were not directly contracted by the carriers.
Bishop, who has not been charged with any crime, declined to comment, and his attorney, Tyler Tapp of Hot Springs, was not available for comment on Tuesday afternoon. Price also declined to comment.
Newman, 63, owned Douglass-Newman Insurance Agency in Hot Springs from 1987 to 2014, when he sold it for cash to Alliance, which already had a Hot Springs office. His former business was rolled into Alliance, and he worked there as an employee.