Kemper In Runoff Still Plays Hardball

Kemper In Runoff Still Plays Hardball

By Daniel Hays

NU Online News Service, Aug. 20, 3:18 p.m. EDT?The tough tactics used for the runoff of Kemper Insurance Companies are still continuing despite a change in management, according to interested parties.[@@]

Kemper announced two weeks ago that by mutual consent it was terminating the runoff contract with Kenning Financial Advisors and that Kenning Chief Executive Officer Michael Coutu, who was also serving as Kemper acting CEO and CFO, had resigned.

The change, however, has done little to help the widows and orphans of dead workers, amputees and others who are seeking compensation for workplace accidents at an Indiana steel plant, which had a Kemper surety bond to back up its self-insured workers' compensation program.

Kemper is currently in court arguing that the $3 million bond does not cover 96 former Bethlehem Steel employees who were injured on the job before Sept. 1, 2000 and after Sept. 1, 2001, and who have been left with no medical benefits or compensation payments. Bethlehem filed for bankruptcy on April 30, 2003.

Krysten Lester, a procedure analyst for the Indiana Workers' Compensation Board, said when the board learned of the change in management at Kemper, it had put out feelers to see if the company would offer a settlement, but "they haven't acted like they were interested."

In court papers, Kemper contends that the board misread the period of coverage in the bond agreement.

Oral arguments over the issue have been scheduled for Sept. 20 at the Indiana Court of Appeals in Indianapolis.

Kemper, when it terminated its contract with Mr. Coutu, put out a statement that some unnamed members of "the Kenning team" were remaining to assist in the ongoing runoff. The selection of a new CEO for Kemper is still in process.

Linda Kingman, spokeswoman for Long Grove, Ill.-based Kemper, said that the company board in consultation with Illinois insurance regulators is still interviewing potential CEO candidates.

Before Mr. Coutu and the Kenning firm's departure, policyholders had complained that Kemper was rejecting millions in claims, seeking money for costs that went back many years, and had ended dividend payments.

In reaction, the Marsh brokerage advised its Kemper clients in a letter to "consult with legal counsel."

The brokerage also warned policyholders that the Kenning-managed Kemper, in addition to other moves, might try to convince insureds to "accept a settlement at less than what you perceive is fair value."

According to a policyholder who declined to be named, prior to the Kenning contract termination Illinois regulators met with Marsh and also heard complaints from major policyholders. A spokesperson with the Illinois Department of Financial and Professional Regulation, which contains the insurance division, refused to confirm or deny if the contacts took place.

Asked why she could not say whether a meeting took place, Clair Thorpe said, "details of a runoff plan are confidential."

Kemper Chairman David B. Mathis said when the Kenning termination was announced, "We asked Mike Coutu to map out a run-off plan for Kemper, and he has done that with the concurrence of the Illinois Division of Insurance and certain other states as members of the National Association of Insurance Commissioners.

"Our policyholders were fortunate to have Mike's leadership at recent critical times for our company, and we are grateful for all his contributions and the experience and expertise that he and Kenning brought to us. As we move deeper into implementing the plan he developed, Mike and the board of directors agreed that it was a good time for transition."