COMMISSION 
AGENDA MEMORANDUM                        Item No.          8g 
ACTION ITEM                            Date of Meeting     November 9, 2021 

DATE:     November 1, 2021 
TO:        Stephen P. Metruck, Executive Director 
FROM:    Jeff Hollingsworth, Director, Risk Management 
SUBJECT:   Insurance Broker Services  Liability Insurance Program 
Amount of this request:              $425,000.00 
Total estimated project cost:         $425,000.00 
ACTION REQUESTED 
Request Commission authorization for the Executive Director to execute a contract with an 
insurance brokerage firm for the purpose of procuring liability insurance for the Port over a threeyear
period with two one-year extension options. The procurement of liability broker insurance
services for the three years plus the two one-year renewal options will utilize a competitive 
process and is estimated at $425,000.00. 
EXECUTIVE SUMMARY 
The Port purchases liability insurance to protect against third party claims and litigation and uses
a licensed broker to market, solicit bids, negotiate terms and coverage, and evaluate insurer
solvency as part of the Port's liability procurement process. The liability insurance program
renews annually on October 1 (insurance contracts are one-year contracts). The current liability
broker services agreement expires May 1, 2022.
The broker will be licensed in accordance with RCW 48.17 and authorized to serve as a broker
(agent) of the Port in all insurance transactions. The broker will be licensed to transact business
with both admitted Washington State insurers as well as those domiciled elsewhere. Premium
payments for insurance will be paid directly to the broker who in turn will pay the insurance
carriers. The broker will also provide on-going service throughout the policy year in areas such
as claims advocacy, issuance of bonds, certificates of insurance, review of certain contracts, and
site visits for loss prevention. The broker also ensures that the Port's insurance carriers remain
solvent and financially sound to pay claim obligations as the insurance contract requires. 


Template revised January 10, 2019.

COMMISSION AGENDA  Action Item No. 8g 
Meeting Date: November 9, 2021 
Neither the Port nor other private or public entities with the operational size of the Port can 
efficiently approach and negotiate directly with insurance carriers on items such as coverage
terms, limits of liability, selection of select defense counsel, and deductible amounts. Firms like
the Port use licensed brokers to facilitate this process and secure the best terms and coverage 
at the best price. 
Upon selection of the broker, the Port and broker will collectively work towards the 
October 1, 2022, liability insurance renewal. The broker will submit insurance marketing 
information, applications, and policy specifications to various insurance markets to solicit bids 
for the liability insurance coverage.  The Port has 10 different liability insurance policies and
many insurance carriers who participate in providing liability insurance for the Port. 
The broker will be licensed in accordance with RCW 48.17 and authorized to serve as a broker
(agent) of the Port in these transactions. Insurance premium payments will be paid directly to
the broker who in turn will pay the insurance companies. The Port manages and directly pays 
any costs of the insurance deductibles which depending on policy run up to $1.5 million. The 
broker will also provide on-going service throughout the policy year in other areas such as 
recipient of new claims, claim advocacy, loss prevention, contract reviews, issuance of bonds, 
coverage reviews, endorsement issuance, and insurance certificate issuance. 
The scope of work will be in effect for a five-year term, 2022 through 2027 with an initial threeyear
term and two additional one-year extension options. This will provide for insurance up to
October 1, 2027. The Port's liability insurance renews annually and is purchased prior to or no
later than October 1 for the upcoming 12 months. 
JUSTIFICATION 
The Port utilizes the services of a Washington State licensed broker to facilitate the purchase of 
insurance. Licensed brokers have the ability to find suitable insurance carriers that have the 
financial strength and interest in insuring Port operations. Due to the size of the Port's total 
operations, there are several insurance companies who provide coverage under different 
policies. 
The licensed broker also has the ability to purchase bonds the Port uses. This includes street
use, pension, and notary bonds. The broker also issues evidence of insurance to interested third
parties that arise out of contractual obligations such as when the Port rents or leases
equipment. 



Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. 8g 
Meeting Date: November 9, 2021 

Insurance Purchased - The Port purchases excess non-aviation commercial general liability
insurance that covers losses involving actual or alleged bodily injury and property damage that
arises from claims made against the Port by third parties. This is a primary policy with a $1
million per occurrence (claim) retention and a limit of $10 million per occurrence. Excess to this
primary policy is a policy with coverage up to a $50 million per occurrence limit, which provides
coverage for Port non-aviation exposures such as the grain terminal, cruise, marina, real estate, 
and non-NWSA terminal operations. 
The Port purchases a separate airport operator's insurance policy that covers liability claims 
from third parties that involve property damage and bodily injury that arise out of airport
operations, airport related operations and on airport premises (including premises managed by
the airport properties group). The limit of liability is $500 million with a $1 million per 
occurrence (claim) retention. 
Liability insurance is also purchased to cover exposures and liabilities that could stem from the 
wrongful or non-intentional acts of Port employees, directors, and Commissioners (Public 
Official Liability) and employment practices liability ($10 million aggregate limit/$1.5 million per 
claim retention); fiduciary liability ($5 million limit/no-deductible), and law enforcement liability 
($10 million limit/$1 million per wrongful act retention). There are also several small policies
that cover Port vessels, drones, and employee theft and dishonesty. 
DETAILS 
Purpose is to hire a broker licensed for insurance transactions, to place and bind appropriate 
liability insurance coverage for the Port at the most economical cost. 
Scope of Work 
The services the broker will provide include: 
1.  Submission of marketing specifications to various insurance  markets for the purposes 
of soliciting quotes on coverage from qualified and financially solvent insurance carriers. 
2.  Present to the Port the best proposals from insurers and negotiate directly with insurers
on terms, deductibles, limits, and coverage extensions, as well as price. 
3.  Pay for the Port's insurance purchase transactions in both the admitted and surplus 
markets directly to the insurance companies. The Port will in turn pay premiums to the
broker. The premiums the Port pays are all net of any insurance commissions. 
4.  Serve as the Port's insurance broker of record when asked and as needed. Insurance
transactions must be done by licensed and bonded brokers or agents as defined in the 
Revised Code Washington to include admitted policies and surplus lines policies. 

Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. 8g 
Meeting Date: November 9, 2021 

5.  Monitor the financial solvency of insurance companies who are insuring the Port and 
replace carriers as needed if they fall below an acceptable financial solvency rating. 
6.  Coordinate additional coverage for new operations and facilities as needed to ensure 
appropriate coverage. 
7.  Provide bonds to the Port as needed to include notary, pension, traffic control, and/or
other bonds, normally from a regulatory agency like the City of Seattle, State of
Washington, and Department of Ecology. 
8.  Provide insurance support services in the area of loss control, property valuations, and 
underwriting studies as requested by the Port. 
9.  Review contracts and interlocal agreements and issue upon request statements and/or
certificates of insurance to third parties requesting such information. 
Schedule 
The Port will hire a broker by March 1, 2022, to allow for binding of liability insurance coverage 
on October 1, 2022.
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1  Do not hire a licensed insurance broker and do not purchase commercial 
liability insurance. 
Cost Implications: There are no direct costs to the Port with this option. 
Pros: 
1.  The Port is not required by statute to purchase liability  insurance. The Port could 
choose to wholly self-insure all the liability exposures without insurance, with the
exception of auto insurance.  Auto insurance requires regulatory approval form the
Department of Licensing which the Port has. The annual savings projected forward
would be roughly $1.4 million for the next five years. However, a single lawsuit or
litigation against the Port could exceed that amount several times over
2.  The immediate savings would be the $85,000 per year which is the projected broker fee
going forward for five years. 
Cons: 
1.  This could have a severe financial impact on the Port if the Port had one or more
unforeseen events happen in any of its operational areas. 

Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. 8g 
Meeting Date: November 9, 2021 

2.  A large unforeseen expense for something that could have been insured could have a
severe impact on the short-term financials in the year the event was recorded. 
3.  The lack of insurance could be viewed also publicly as a lack of maintaining proper
insurance equivalent to other airport and port entities. 
4.  Insurance for most policies pays for legal fees associated with the insurer defending the
Port against third party allegations. These fees are outside of the liability limit of the
policy, meaning the insurance limit is not eroded by the payment by the insurer for
defense counsel expense. 
5.  Often third-party agreements require the Port to show evidence of insurance and would
not simply accept at statement from the Port stating that the Port will pay for its
obligations to the third party. This could prevent of slow down the execution of an
agreement with a third party. 
6.  No other public entities similar in size to the Port use this approach. 
This is not the recommended alternative. 
Alternative 2  Do not hire a licensed insurance broker and try to purchase sufficient 
commercial liability insurance coverage without a broker. 
Cost Implications: The Port would save on broker service fees but not on the insurance itself. 
Pros: 
1.  The Port could seek insurance companies who may work directly on providing the Port
a liability policy (policies), and thus save on the fee for a broker. This using the estimate
for services estimate for this request would be about $85,000 per year for the next five
years. 
2.  The Port would also have a cost for the insurance it could purchase but that would be
higher than the cost compared to if a licensed broker was procuring this coverage. This
is due to the fact very few insurance companies work directly with a large commercial
client.
3.  This approach would also lead to various Port operational areas without insurance (like
Alternative #1) as some companies will not work directly with a client. Thus, the costs
would approach Alternative #1 but without the cost of insurance savings. 
4.  In the event a claim occurs that includes litigation and outside counsel, the Port would
have to fund that total expense and go through a process to select and hire such
counsel. 

Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. 8g 
Meeting Date: November 9, 2021 

5.  There is the opportunity of more tailored servicing by procuring through a broker who
then can work with an insurer to provide supplemental services at little to no cost such
as loss prevention. 
Cons: 
1.  There are very few liability insurers who would work directly with the Port that the
Port knows about. This could be problematic if this insurer declined to offer coverage
for certain perils or had limited capacity to insure certain types of liability.
2.  If the Port needed specialized insurance the selected insurer may not have the
ability to meet this need, thus then requiring the Port to hire a broker to find 
suitable coverage for the specialized need. This would require a broker fee and
could apply to specialty coverage the Port currently includes in its liability insurance
such as active assailant coverage; first party mobile equipment coverage and
terrorism coverage. 
3.  If the Port could not reach agreement on the price or on terms of coverage with the 
direct insurer, the Port could end up with no coverage (Alternative 1 above). 
4.  The Port would also have a cost for the insurance it could purchase but that would
be higher than the cost compared to if a licensed broker was procuring this
coverage. This is due to the fact very few insurance companies work directly with a
large commercial client.
5.  This approach would also lead to various Port operational areas without insurance
(like Alternative #1) as some companies will not work directly with a client. Thus,
the costs would approach Alternative #1 but without the cost of insurance savings. 
6.  In the event a claim occurs that includes litigation and outside counsel, the Port
would have to fund that total expense and go through a process to select and hire
such counsel. 
7.  There is the opportunity of more tailored servicing by procuring through a broker
who then can work with an insurer to provide supplemental services at little to no cost
such as loss prevention. 
8.  The Port does not have the staff or resources to perform the functions of an
insurance broker. The Port does not purchase enough liability insurance throughout
the year to justify adding this resource internally. 

Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. 8g 
Meeting Date: November 9, 2021 

9.  The Port could internally assign staff to meet State of Washington admitted and
surplus  lines  insurance  requirements;  however,  that  covers  only  State  of
Washington requirements and requirements and license requirements vary from
State to State and from Country to Country. 
This is not the recommended alternative. 
Alternative 3  Hire a licensed broker to seek solvent and qualified liability insurers who can
provide financially sound insurance for the varied liability exposures of the Port. This broker
would be licensed to transact business with admitted insurers in the State of Washington as
well as insurers from the surplus lines marketplace, as well as foreign companies such as those
represented by Lloyds of London. 
Cost Implications: $85,000 estimated average annual broker service fee. 
Pros: 
1.  The benefit of using a licensed broker is the broker's ability to find and connect 
interested and financially capable insurance companies with the Port. Licensed brokers
have contacts with several different insurance companies, around the United States and
other countries, that they transact business with on a day-to-day basis. They also have
knowledge of new insurance carriers who have the solvency to underwrite large 
accounts like the Port. 
2.  The cost of using a broker is less than 13% of the cost of the policy itself. The savings in 
the insurance product through a competitive selection of insurance using a broker, 
and the ability of the broker as an intermediary will cover the cost of the broker service
fee. 
3.  Using a broker frees up staff time to focus on other projects and tasks and thus reduces
need for staff. 
4.  In the event of an insurance claim, the broker has access to adjusters and loss 
investigators that can speed up the adjustment of the claim, recommend defense
counsel and other experts, as well as negotiate the claim directly with the insurer using
internal resources the Port does not have.
5.  In the event of a new acquisition, the broker has the resources to obtain coverage
quickly and facilitate any requirements of the purchase. This would include any
insurance that is required as part of the contractual purchase or other agreement
requirements. For example, when the Port agrees to provide dispatch services for some
of King County, that agreement requires a certain type and level of commercial
insurance.

Template revised June 27, 2019 (Diversity in Contracting).

COMMISSION AGENDA  Action Item No. 8g 
Meeting Date: November 9, 2021 

Cons: 
1.  A service agreement takes time to solicit and procure, and then manage over the term 
of the contract. 
2.  If a broker is selected, and the ensuing performance is poor, or the insurance proposals
that the broker provides to the Port are unsatisfactory, the Port may end up with
insurance that does not meet its needs. 
3.  In the event the Port is not happy with the selected broker, the Port would have to 
terminate the contract, and initiate a new solicitation process to find a replacement 
broker. 
This is the recommended alternative. 
FINANCIAL IMPLICATIONS 
The estimated cost of liability broker services fee on an annual basis is $85,000. 
The request for authorization is only for the broker service fees and not for purchase of 
insurance. 
Annual Budget Status and Source of Funds 
Funding will be included in the annual operating budgets of Corporate Division 
ATTACHMENTS TO THIS REQUEST 
None 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
January 5, 2016  Request to Commission to authorize funding for a broker for liability
insurance services for 2016-2021 (note this contract was amended one year beyond the
original contract term to avoid a procurement during Covid -2019). 
September 8, 2015  Presentation to the Commission on liability insurance program 
renewal. 
January 14, 2011  The Commission authorized procurement of liability broker insurance
services for the years 2011 to 2016. 



Template revised June 27, 2019 (Diversity in Contracting).