Chicago MGU Sues Manning Riddell Over Bogus E&O Coverage

Insurance Journal recently unveiled information regarding an ongoing investigation into Torrance, Calif.-based Manning Riddell Insurance Services Inc. (License #0827722). Manning Riddell allegedly issued more than 1,000 phony errors and omissions (E&O) policies for life insurance agents in some 30 states.

After fielding phone calls from several dozen affected agents, IJ learned that Manning Riddell is currently the subject of litigation in at least one lawsuit, Five Star Managers LLC vs. Manning Riddell Insurance Services Inc. The suit was filed in the U.S. District Court for the Northern District of Illinois Eastern Division.

According to the suit, Chicago-based managing general underwriter Five Star and Manning Riddell entered into a producer agreement in April 2003, through which Manning Riddell would act as a retail agent for E&O coverage, soliciting applications and premiums for insurance coverage provided by Alea London. Manning Riddell was to submit any and all premiums collected to Five Star, which in turn would remit the applications and payments to Alea London.

Five Star offers E&O, employment practices liability insurance, workers’ compensation and umbrella insurance.

In May of 2003, Manning Riddell sent Five Star several checks reflecting premium payments that bounced. In August and September of 2003, Five Star received several other bounced checks from Manning Riddell. Five Star terminated their relationship with Manning Riddell on Sept. 19, 2003.

Soon thereafter, Five Star received several phone calls from individuals seeking to confirm coverage that was allegedly bound by Manning Riddell. According to the suit, “The inquiries related to applications and premiums collected by Manning Riddell in July and August of 2003, but which were never forwarded to Five Star.” An investigation by Five Star revealed that Manning Riddell never submitted any applications or premium payments on behalf of the individuals.

Five Star received a copy of a letter sent to one of the individuals attempting to confirm their coverage from Manning Riddell’s legal counsel at the time, Los Angeles firm Cotkin, Collins & Ginsburg. The letter, penned by Joan Cotkin, stated, “We have been asked by Manning Riddell Insurance Services Inc. to contact you regarding the Insurance Agency Liability Trust Risk Purchasing Group Program. It would appear your insurance agent’s professional liability errors and omissions insurance was not in effect on the date in question. Because the coverage did not go into effect, upon your request, the premium will be fully refunded if you have not already received a refund or applied your premium to new coverage.”

Five Star’s outside counsel, Stephen C. Baker, contacted Cotkin, and was referred to paralegal Randy Roach, who informed Baker that the letter, dated Sept. 16, 2003, had been sent to 915 addresses. A second letter also relating to Five Star had been sent to a “slightly smaller number of addresses.”

The suit also revealed that a failed relationship between Manning Riddell and Dakota Specialty Insurance Co. left “potentially hundreds” of insurance agents without E&O coverage. “Upon information and belief, without Five Star’s knowledge, Manning Riddell directly and/or through its counsel was representing that they could now move these uninsured agents into the Five Star Independent Life Insurance Agents Errors and Omissions Program.”

On Oct. 23, 2003, Baker received a fax from Cotkin stating that the firm no longer represented Manning Riddell, and all inquiries should be directed to one of Manning Riddell’s principals, Christine Riddell. Baker contacted Riddell on Oct. 27, 2003, and asked her to authorize the Cotkin firm to release any records regarding the Sept. 16 and subsequent letters, to which Riddell refused.

Furthermore, the lawsuit stated that Manning Riddell’s Web site was fully functional on Oct. 24, 2003, but rendered inoperable as of Oct. 27, 2003.

Based on the above-mentioned actions, including Manning Riddell’s avoidance of contact by Five Star, the complaint concluded that, “There is an imminent danger that Manning Riddell and/or its principals will withdraw all funds that are owned by and required to be remitted to Five Star.”

It also stated, “At the outset of the relationship, Manning Riddell remitted some premium payments in an attempt to lull Five Star into a false sense of security, to mask the more widespread fraud that Manning Riddell was committing or was about to commit, and to facilitate fraud,” and that “it is believed by Five Star that Manning Riddell is in a precarious financial condition, may be insolvent, and may soon seek protection under the bankruptcy laws.”

Five Star Executive Vice President Kevin Ottley would not comment on the matter due to the ongoing litigation.

IJ first learned of this matter when a tip came through from jilted life insurance agent Tom Herz in the San Francisco area. Herz was a recipient of the Sept. 16 letter. To date, Herz has not received any refunded monies from Manning Riddell or Cotkin, Collins & Ginsburg.

William Botsch of New Ideas Insurance Agency in Catonsville, Md., also was under the impression that he was insured by Manning Riddell until he received a letter from the San Francisco office of law firm LeBoeuf, Lamb, Green & MacRae LLP.

According to the letter, Manning Riddell issued several hundred certificates allegedly through Dakota Specialty Insurance Co., now Aspen Specialty Insurance Co., a subsidiary of Aspen Insurance Holdings Ltd. Dakota reportedly never authorized issuance, and did not collect any premium monies from Manning Riddell.

“Manning Riddell apparently sold a number of insurance policies to life insurance agents-on those policies, they placed the name Dakota Specialty Insurance without their knowledge,” said Dean Hansell, partner with LeBoeuf, Lamb, Green & MacRae. “The [California Department of Insurance] is involved and we are in communication with them regarding the investigation.”

Manning Riddell has reportedly retained the legal services of Peter Morris of Los Angeles-based Altman & Morris. Morris would not comment on the investigation.

IJ contacted three listed telephone numbers for Manning Riddell. Two were disconnected and there was no answer at the third.
Several agents who had dealings with Manning Ridell spoke with IJ. Mark Kontz, from the Sioux Falls, S.D., area, said he held his E&O policy with Manning Riddell for about seven years with no problems. In June 2003, Kontz was sued, but when he made a claim on his E&O policy, he found out that his coverage with Manning Riddell was nonexistent.

Kontz said he contacted Chubb directly because the company was listed on the certificate as Manning Riddell’s E&O carrier. At that time, Chubb informed Kontz that they dropped their E&O with Manning more than a year before. Chubb would not confirm its role as Manning Riddell’s E&O carrier, and would offer no comment on the investigation.

So far, IJ has received calls and e-mails from agents affected in the following states: California, Texas, Wisconsin, North Carolina, Arizona, Louisiana, Tennessee, Hawaii, Minnesota, South Carolina, Florida, Maryland, Rhode Island, South Dakota and New York.

IJ received copies of a number of the insureds’ certificates from agents who said they had purchased E&O coverage through Manning Riddell. Several certificates state that the policy was written under Choice E&O RPG, others state Insurance Agency Liability Trust RPG. The carriers range from Illinois Union Insurance Co., Illinois Union Insurance Group, Lloyds of London, Cigna Property & Casualty and Dakota Specialty. Calls to these carriers went unreturned by deadline. Aspen Specialty referred IJ to their legal counsel, Dean Hansell.

Some of the insureds reported that they had been issued memorandums of insurance supposedly covered by Lloyds of London, but no policy number was ever issued. In another instance, Manning Riddell allegedly changed the dates on an original certificate to reflect the policy’s renewal and then faxed the altered copy to the insured.

Christine Joann Riddell is also licensed under the name Choice E&O Insurance Services (License #0485661) with a business address listed at 408 N. Prospect Ave., Redondo Beach, Calif., 90277. Margaret Murray Manning (License #0805119) is listed was 1640 S. Pacific Coast Highway, Redondo Beach, Calif., 90277.

The following individuals have been confirmed to have represented Manning Riddell Insurance Services as an employee through signed documents on behalf of Manning Riddell: Stacey Annette Hendrix (License #0B97323), 2356 Torrance Blvd, Torrance, Calif., 90501; Leticia Munoz; Cecilia Estrada; and Jane “JH” Simmons.

Manning Riddell is also allegedly operating under the name Trace.

The California Department of Insurance is reportedly investigating the case, but has not commented on the investigation. It is unclear at this time how long the fraudulent activities have been taking place.