Another service-contract refund program might be in trouble, but this time the provider isn’t to blame.

The North American Dealer Co-Op (NADC), which came to the aid of automotive dealers when another guaranteed refund program (GRP) folded over the summer, is now in danger of losing its own 17-year-old program.

Hank Bailey, president of the Colorado-based cooperative association of auto dealers, said it wasn’t the administration of his program that was the problem, adding that NADC dealers put more than $21 million into a collateral reserve account that had about $10 million left to pay out future claims. The problem was the company in charge of the account.

Western Insurance Company, which was declared insolvent on Sept. 19, has filed for liquidation through the Utah Department of Insurance, leaving Bailey, his program and his dealers in jeopardy.

“We’re going to try recuperate as much money as we can for the dealers. I’m not running and I’m not hiding from anyone. I’m spending my own money to go get it,” Bailey says. “I’ve been in business since 1980 and I’ve never burned a dealer in my life.”

According to Western’s liquidation order, the company is owned by Dick L. Rottman and is described as a Utah-domiciled stock insurance company that is licensed in 35 states to write property and casualty insurance. Previously domiciled in Nevada, Western has since lost its certificate of authority in that state. The Nevada Division of Insurance (NDI) revoked the certificate on Sept. 21, according to Jake Sunderland, the NDI spokesperson.

Bailey said Western, in the event that NADC’s reserve account would ever become depleted, would pay all claims above and beyond the amount. He added that he’s not been able to reach Rottman since Western was deemed insolvent, and has been doing all he can to track him down. Calls made to Western went unanswered.

“We were 100 percent protected and they were listed as an A-minus-rated company,” said Bailey, who added that Western had its managing general agent, Access Insurance Services Inc., hold the collateral reserve account on Western’s behalf.

Access, also owned by Rottman, then invested the money into Western, various bonds and a number of other companies owned by Rottman, according to Bailey. “Now, because of bad investments like Western Insurance, bonding contractors and bonding developers, our money is gone,” Bailey said.

Bailey said his company’s relationship with Western dates back to 2004. That’s when the insurance company entered into an agreement to provide a surety bond to NADC and its members.

NADC also filed a complaint against Rottman, who served as the insurance commissioner of Nevada from 1971 to 1978, and five other defendants. Rottman is currently listed as an executive director on the Nevada Captive Insurance Association’s Website.

In May, NADC came to the aid of dealers left hanging after another GRP provider, Vacaville, Calif.-based Signet Financial Group, closed its doors without notice. NADC, along with its sister company, National Administrative Dealer Services, said it would allow dealers to continue to write contracts without interruption, but said it would not pay out claims related to Signet’s product.