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

DATE:     November 1, 2021 
TO:        Stephen Metruck, Executive Director 
FROM:    Jeff Hollingsworth, Director, Risk Management 
SUBJECT: Insurance Broker Services  Property Insurance Program 
Amount of this request:                 $550,000 
Total estimated project cost:            $550,000 
ACTION REQUESTED 
Request Commission authorization for the Executive Director to execute a contract with an 
insurance brokerage firm for the purpose of procuring property insurance for the Port over a 
three-year period with two one-year extension options. The procurement of property broker 
insurance services for the three years plus the two one-year renewal options will utilize a 
competitive process and is estimated at $550,000. 
EXECUTIVE SUMMARY 
The Port uses insurance brokerage services to assist in the purchase of property insurance from
various insurance carriers. The current property insurance brokerage contract for the Port expires
at the end of March 2022. Upon selection of a broker, the Port will utilize the broker to submit
insurance marketing information, applications, and specifications to various insurance markets
to solicit bids on property insurance coverage for the Port's current assets as well as builder risk
insurance for future major capital projects during their construction.  The Port's portfolio of
assets insured is valued at over $6.8 billion dollars. 
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. Premium payments for insurance will be paid
directly to the broker who in turn will pay the insurance carriers. The broker will also provide ongoing
service throughout the policy year in other areas such as property loss control; mandatory
jurisdictional pressure vessel inspections as required by the State of Washington and City of
Seattle; claim advocacy, and the evaluation of specialized insurance products for certain hazards
such as earthquake, tsunami, and flooding. 
The scope of work will be for an overall three-year term, with two additional one-year options
which would make it a five-year term, from March 29, 2022 to March 29, 2027. The Port's
property insurance renews annually and is purchased prior to or no later than July 1 for the
ensuing 12 months.

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

JUSTIFICATION 
The Port purchases property insurance to provide recovery dollars in the event of physical 
damage to Port assets. 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 to insure Port assets. Neither the Port nor other private
or public entities with the operational size of the Port can approach and negotiate directly with
most insurance carriers with respect to the insurance transactions involved in binding adequate
coverage. Firms like the Port use a licensed broker to secure the best terms and coverage at a 
cost-effective price. 
The solicitation process will evaluate the availability of qualified small business, minority owned 
business, or disadvantaged business enterprises that can do this work. If there are small business 
opportunities available, they will be included in the evaluation and selection process. 
DETAILS 
To hire a brokerage firm who is licensed to place and bind appropriate property insurance 
coverage for the Port at the least 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 markets. 
2.  Coordinate with the selected insurer the completion of all state and city required
pressure vessel inspections. 
3.  The execution of all insurance purchase transactions in both the admitted and surplus
lines markets. Premiums will be paid to the broker who in turn pays the respective
insurance companies. 
4.  Serve as the Port's insurance broker of record. Insurance transactions must be done by
licensed and bonded brokers or agents as defined in the Revised Code Washington. 
5.  Monitor the financial solvency of insurance companies who insure the Port and replace
carriers as needed if they fall below an acceptable financial solvency rating. 
6.  Coordinate and purchase appropriate property insurance coverage for new capital
projects while they undergo construction.  This coverage knows as "builder's risk
insurance" provides insurance for the physical asset or improvement being constructed.
The insurance covers both the interests of the Port and the contractor. The insurance
protects against physical damage and loss to building and contents while being built.
Following completion, the improvement is then added to the schedule of insurable
property on the main Port insurance schedule. Thus, this coverage is only in effect during 
construction.

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

7.  Provide insurance support services in the areas of loss control, property valuations, and
underwriting studies as requested by the Port. 
8.  Provide insurance upon request for certain valued goods and products purchased by the
Port while in transport to the Port from the vendor. 
9.  Provide special insurance as required by contract for goods and other property not
owned by the Port but either lent or in the possession of the Port by contact or other
agreement. This includes items such as TSA explosion detection screening machines
and/or art exhibits being lent to the Port for display purposes. 
10. Provide the purchase of property insurance to the North Harbor Port properties that are
managed by the Northwest Seaport Alliance. 
11. Provides the purchase of property insurance to the North Harbor Port properties that are
managed by the Rental Car Facility.
Schedule 
The Port will hire a broker by April 1, 2022, to allow for binding of property insurance coverage 
on July 1, 2022. 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1  Do not hire a licensed insurance broker and do not purchase commercial 
property 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 property insurance. The Port could choose
to wholly self-insure all property assets without the purchase of any commercial
insurance. If the Port self-insured all property risks, without any commercial insurance,
it would not require the services of a licensed insurance broker and would generate 
premium savings.
2.  The immediate savings would be the $2.5 million in premium (cost of recent insurance
for one year) and the $110,000 for broker services. 
Cons: 
1.  This could have a severe financial impact on the Port if a catastrophic unforeseen event
caused physical damage to one or several of the Port's properties. The premium savings
in any one year, say $2.7 million would be substantially less than the cost to rebuild a
major facility should such a loss occur from a natural or man-made peril.  This would
require the need to use other funds for repairs or rebuilding critical facilities. This could
then impact the Port's funding of future projects or completion of current projects
underway if funds have to be diverted for rebuilding assets in lieu of developing future
projects. It could also impact the short-term cash and liquid asset savings the Port carries
for immediate cash use if these are used to fund a large loss.

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

2.  FEMA  (Federal  Emergency  Management  Association)  which  provides  monetary
assistance following large scale disasters is a potential source of funds, however, their
relief is contingent on the entity carrying property insurance on the property that is
damaged (or property that could be damaged in the future). 
3.  The  property  insurance  program  funds  the  required  jurisdictional  pressure  vessel
inspection and certification program that is required by both the City of Seattle and State
of Washington. The Port would have to pay another source to do these inspections which
takes one person about 9 weeks of work on site. The fee to do this specialized work
would be roughly 2/3 of the estimated broker fee of $110,000 or $73,333. 
4.  No other public entities similar in size to the Port use the approach of wholly self-insuring
their assets without any form of commercial insurance.
5.  Not using commercial insurance in some form would be viewed by the public as not
properly taking care of the assets that are under the Port's stewardship. 
6.  Large capital projects which require a builder risk insurance policy would require the
contractor to purchase this policy instead of the Port. This would be at a much higher
cost than the Port could purchase such a policy if it were purchasing commercial property
insurance. 
7.  No other public entities similar in size to the Port use the approach of wholly self-insuring
their assets without any form of commercial insurance.
8.  Not using commercial insurance would be viewed by the tax paying public as not properly
taking care of the Port's assets. 
9.  The NWSA and the RCF utilize the Port properties for their operations and there is  an
expectation that the Port will adequately insure these important properties. 
This is not the recommended alternative. 
Alternative 2  Do not hire a licensed insurance broker and try to purchase sufficient 
commercial property 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
for property insurance, and thus save on the fee for a broker, which could save $110,000. 
2.  In the event of a claim involving the insurance, the Port could negotiate directly on the
adjustment of the loss rather than dealing with its broker. 
3.  There is the opportunity of more tailored servicing by dealing directly with an insurer. 
Cons: 
1.  There is only one identifiable property insurer 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 property.

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

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 property 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  property  insurance  program  funds  the  required  jurisdictional  pressure  vessel
inspection and certification program that is required by both the City of Seattle and State
of Washington. The Port would have to pay another source to do these inspections which
takes one person about 9 weeks of work on site. The fee to do this specialized work
would be roughly 2/3 of the estimated broker fee of $110,000 or $73,333. 
5.  Port would have to add a person to perform the broker services as current staff could not
handle this added task with current staffing. 
6.  In the event of an insurance claim, a broker can offer services to adjust the loss and assist
in the repairs or providing resources to minimize loss and damage. This includes access
to loss investigators that can speed up the adjustment of the claim and negotiate the
claim directly with the insurer using internal resources the Port does not have.  This
would include damage assessment and damage mediation. The Port would have to
provide all this on its own. 
7.  In the event a new capital project or an acquisition, the broker has the resources to
obtain coverage quickly and facilitate any requirements of the purchase.  This would
include any insurance the local jurisdiction may require. 
8.  Property insurers have available resources in code compliance, fire and life safety
regulations, and other regulatory areas to assist the policy holder, often at no charge as
a benefit to the policyholder and the insurer if building and property are in compliance
with codes and properly protected with engineered fire and life safety systems. 
This is not the recommended alternative. 
Alternative 3  Hire a licensed broker to search the property insurance marketplace and bring 
back proposals from various insurance carriers who can provide the various property policies of 
insurance that the Port needs and provide the resource for the pressure vessel inspection and
certification needs imposed by the State and City of Seattle. 
Cost Implications: $ 110,000 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 world 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. They can also negotiate
coverage terms and price for the Port.

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

2.  The cost of using a broker is less than 10% 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 to serve 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. The broker also stays current on trends and legal changes that affect
insurance which Port staff does not have the time to do themselves. 
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 and negotiate the claim 
directly with the insurer using internal resources the Port does not have. The insurance
company will also have specialty forensic firms to assist in the damage assessment and
damage mediation 
5.  In the event a new capital project or an acquisition, the broker has the resources to
obtain coverage quickly and facilitate any requirements of the purchase.  This would
include any insurance the local jurisdiction may require.
6.  Property insurers have available resources in code compliance, fire and life safety
regulations, and other regulatory areas to assist the policy holder, often at no charge as
it is a benefit to the policyholder. 
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 or is to costly for the coverage obtained. 
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 the property broker services fee on an annual basis is $110,000. 
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 budget Risk Management within the Corporate 
Division.

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

ATTACHMENTS TO THIS REQUEST 
None 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
June 28, 2016  Commission briefed on the renewal of the property insurance program. 
November 22, 2016  Commission requested to authorize funds to procure property insurance
broker services for the 2017-2022 policy years using a competitive process.