Item 7c Supp
ITEM NO: 7c_Supp DATE OF MEETING:__6/23/2009_______ Property Insurance Renewal Update Presented 6/23/2009 Jeff Hollingsworth, Risk Manager Outline Property Insurance Program Recap Structure of Property Insurance Property Insurance Cost Factors Property Insurance Challenges Earthquake Insurance Discussion Renewal Projection for July 1, 2009 2 Property Insurance Cost Re-Cap Excludes Nisqually Quake Costs Property Values X $1000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Property Insurance Est Property Values 3 Property Insurance Coverage (No Fault Coverage Coverage is Annual) Fire and Extended Coverage Fire, Wind, Collapse, Impact, Explosion Terrorism Separate Limit Construction in Process Separate Limit Rental Car Facility Separate Builder Risk Policy Insured for full value of the constructed value Coverage in place during work stoppage 4 Current Structure of Property Program (Major Deductibles) $1Million Fire and Extended Coverage $50,000 Course of Construction $25,000 Fine Arts $100,000 Equipment Breakdown 5 Current Structure of Property Program (Main Limits Insured) $1 Billion Fire/Extended Coverage Limit; No Earthquake $25 Million Flood Limit $50M Course of Construction Limit $350K Terrorism $100 Million Equipment Breakdown $100 Million Business Interruption 6 Underwriting of Program First $25 Million with Lexington Excess coverage with various Lloyds Syndicates A+++ Rating Procured by Alliant Insurance and RK Harrison (London broker) 7 Property Insurance Cost Factors Rates depend on: Total insurable values reported: Values of Projects Under Construction Loss Record Primary and Reinsurance Markets Underwriting of Locations (Port Portfolio) Cost of Major Materials Catastrophic Exposure (Wind, Earthquake, Flood ) 8 Major Property Losses (Losses Excluding Earthquake and Environmental) Aviation (1993-2009) Non-Aviation (1993-2009) 2006 Terminal, spill~ $150K 1993 T-86, fire~$1M Total Property Damage-Net of Collections 1997 T-18, crane~$.7M 2005 Losses = $150,000 Recovery = $108,000 2002 T-86, spout~$.6M 2006 Losses = $341,000 Recovery = $160,000 2004, FT, water~$.18M 2007 Losses = $134,000 Recovery = $113,000 2006 T-86, spout~ $TBD 2008 Losses = $150,000 Recovery = $104,000 2007 T-86, spout~ $TBD 2009 Losses = $8,000 Recovery = $4,000 Collection Recovery ~ 74% Excludes T-86 Spout Losses 9 Earthquake Insurance Challenges Available coverage limited Reinsurance markets capacity limited Past loss history with Nisqually Port has high insurable values Port has aggregation of values around Seaport and the Airport Big exposure to Port is at loss levels above $100 Million Limits on coverage is typically $100 Million 10 Earthquake Insurance Options Based on Costing from November, 2009 Coverage Limit Deductible Location Value Premium $40 Million 3% of Value Pier 69 $40 Million $60,000 Building $25 Million $25 Million Any Port Applies to all $250,000 property Port values $25 Million $50 Million Any Port Applies to all $125,000 property Port values $25 Million $75 Million Any Port Applies to all $112,500 property Port values $75 Million $25 Million Any Port Applies to all $487,500 property Port values $75 Million $100 Million Any Port Applies to all $275,000 property Port values 11 Current Capital Projects Construction property insurance rolled up into main insurance program Capital values for Non-Aviation ~ $ 91 Million* Capital values for Airport ~ $124 Million* Excludes Rental Car Facility Rental Car Facility Port has a separate policy for this project Insured to $280 Million Covers Port and its contractors * As of May 2009 (will be updated prior to renewal) 12 Property Renewal Forecast* July 1, 2008 Port has budgeted $1.35 Million for renewal Renewal range estimated to be between $1.2 Million and $1.3 Million with no changes to overall structure, including deductibles. Renewed on July 1, 2008 at a premium of $1,213,332 Risk Management will evaluate options if offered for: Terrorism and Earthquake No earthquake coverage purchased. Other program changes such as deductibles Minor changes including lower deductible for Fine Arts/Exhibits Risk Management to discuss/brief Divisions prior to binding including final property schedule. * From Commission Meeting of June 3, 2008 13 Property Renewal Forecast July 1, 2009 Port has budgeted $1.4 Million for renewal Market still has lower pricing; Increase is due to higher completed values and trend adjustment Includes T-91, T-30, and Miscellaneous airport projects Renewal range estimated to be between $1.3 Million to $1.5 Million; With no changes made to overall structure, including deductibles. Risk Management will evaluate options for: Earthquake To evaluate options for coverage for Pier 69 Building To evaluate options for crane coverage and loss of income. 14
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