FINDLAY, Ohio (March 17)—Cooper Tire & Rubber Co. last year spent $10.3 million more in insurance premiums after it went to a new insurance structure when its old policy expired, the tire maker said in a report to the Securities and Exchange Commission.
The change, which included the establishment of a captive insurance company, increased Cooper's coverage by $35 million, the company said. Roger Hendriksen, director of investor relations and corporate communications, said renewal of the old policy would have carried higher premiums.
"Because of the increasing premiums we opted to do a different structure," he said, adding the move was "not necessarily a direct result of increasing (product liability) claims on Cooper."
Cooper said in its 10-K filing it had established a new excess liability insurance program in April 2003. The program covers product liability claims on or after April 1, 2003, and is occurrence-based coverage. The coverage includes an increased per-claim retention limit, increased policy limits and the captive insurance company, Cooper said in its filing. Premium costs for coverage in excess of the self-insured amounts were $10.3 million higher than under the previous program, Cooper said. Total insurance costs were not provided in the filing.
"In the future, product liability costs could have a materially greater impact on the consolidated results of operations and financial position of the company than in the past," the company reported.