PORTLAND, Ore. (April 18, 2006) — Northwest Tire Factory L.L.C. plans to build a warehouse in Salt Lake City and roll out a captive insurance program for its members this year.
The dealer-owned marketing co-operative announced its 2006 plans to 160 members at its annual meeting Feb. 9-11 at the Red Lion Hotel in Portland. The captive program, which will offer worker's compensation, garage keeper's and general liability insurance, will debut during the second quarter, according to Tire Factory CEO Nick Hodel.
After two years of searching for the best deal, Portland-based Tire Factory chose a captive plan administered by Marsh Inc., also in Portland, he said, adding that the timing couldn't be better after hurricanes Katrina and Rita.
“All the guys are seeing now that their insurance costs are jumping dramatically,” Mr. Hodel said. “Everybody's going to pay for that.”
Some Tire Factory members have complained to Mr. Hodel that their premiums had risen 20 to 30 percent since Hurricane Katrina, including those who have had no workplace accidents. With the captive, Tire Factory members with good safety records should see their premiums stabilize, then begin to decline because the captive is based off-shore and will reinvest dividends into premium reductions.
Mr. Hodel declined to name the company fronting the captive program. “We're just trying to help these guys bring a little more to the bottom line, you might say.”
Tire Factory will become the second tire dealer group to introduce captive insurance to its members. Last year, Independent Tire Dealers Group L.L.C., of Juno Beach, Fla., formed a captive insurance company that covered worker's compensation and soon will add garage keeper's and general liability coverage as well.
In Salt Lake City, Mr. Hodel said he made an offer on 10 acres to build a warehouse with approximately 120,000 square feet, “and we're just waiting for them to do their due diligence on all of it.”
Tire Factory has been leasing a 45,000-sq.-ft. distribution facility since 2004 to supply stores in Utah, Montana, Colorado, Wyoming and parts of Nevada.
“It's gone over really well for us,” he said of the leased center. “We don't like leasing, we like buying.”
The dealership plans to begin construction in June and to move into the new warehouse in January or February 2007, according to Mr. Hodel.