Arkansas Regulators Suspend Agent License of Standridge for Dishonest Practices

Arkansas Insurance Commissioner Jay Bradford has suspended the resident producer license of Steve Standridge, founder of Steve Standridge Insurance Inc. based in Mount Ida, Ark., for allegations that he falsified collateral used to purchase another insurance organization, and improperly retained and kept premium financing for a commercial client.

The department of insurance (DOI) said it obtained information on Feb. 24, 2010, indicating that Standridge had “solicited and caused to be presented a premium financing agreement or loan arrangement for approximately $846,311 with the Bank of Star City” of Star City, Ark. The funds were for a commercial property policy for a Camden, Ark., based company for policies issued in November 2008 by RSUI Indemnity Co. with a participating policy issued by Chubb Group of Insurance Cos.

The RSUI policy was cancelled in August 2009 but the Bank of Star City was not notified, the order alleges. Standridge “retained or refused to return to the Bank an unearned premium” of approximately $429,717.53, the order says. On Feb. 26, the Bank of Star City filed suit against Steve Standridge Insurance in the Circuit Court of Lincoln County, Ark., No. LCV-2010-23-2. The order also alleges that a DOI financial review of the purchase of Gibraltar National Insurance Co. by Steve Standridge Insurance uncovered misleading documents related to the funding of the Gibraltar purchase.

On Sept. 29, 2009, the DOI says a Ratification and Written Consent was received from the shareholders and board of Steve Standridge Insurance stating the proceeds of a Jan. 23, 2009, $4 million personal loan to Steve and Debbie Standridge (Steve’s wife), used to purchase Gibraltar were deposited in the form of certificates of deposits in Gibraltar’s name. The Consent also stated that all business assets of the agency were pledged as collateral for the personal loan, which was done with the knowledge of the agency’s board and shareholders.

Then, on Feb. 12, 2010, the DOI discovered that $4 million of Gibraltar’s assets, held in two certificates of deposit, were pledged as collateral for the personal loan from First Service Bank to both Steve and Debbie. On Feb. 17, Steve Standridge endorsed the two certificates of deposit for withdrawal and instructed First Service Bank to apply the funds in satisfaction of his personal loan. However, he wasn’t an authorized signatory for withdrawal.

On the same day, Standridge obtained a loan from First Arkansas Bank and Trust for $4 million to restore the assets to Gibraltar and purchased about $4 million in certificates of deposits at the same financial institution in Gibraltar’s name. He then told Gibraltar’s board that all assets had been restored and not pledged as collateral for indebtedness.

But on Feb. 18, the board learned that the new certificates of deposit were, in fact, pledged as collateral for the loan from First Arkansas Bank and Trust, and that they were the only collateral pledged for the loan to Steve Standridge Insurance. On Feb. 25 and March 1, the DOI learned that at least two board members’ signatures had been forged on the Consent.

Standridge, who founded the agency 28 years ago, agreed to retire immediately from the insurance business, said his attorney, Thomas Curry, of McMillan, McCorkle, Curry & Bennington LLP in Arkadelph-ia, Ark. His children – Alisha Pollock and Jared Standridge – now control the agency, according to the firm’s Web site. A call to Pollock, who serves as president, was not immediately returned. Son Jared Standridge, now vice president, works from the agency’s office in Clinton.

Steve Standridge Insurance, ranked No. 55 on Insurance Journal‘s Top 100 Agency list, has 17 offices throughout Arkansas. Standridge was named the 2006 Professional Insurance Agents’ Agent of the Year.