PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.       7a 
STAFF BRIEFING             Date of Meeting    June 9, 2015 

DATE:    June 2, 2015 
TO:     Ted Fick, Chief Executive Officer 
FROM:    Jeff Hollingsworth, Sr. Manager Risk Management 
SUBJECT:  Report on the Port Property Insurance Renewal for the Policy Year
beginning on July 1, 2015 
SYNOPSIS 
This report is on the upcoming Port's property insurance renewal. The Port's current
property insurance program expires on June 30, 2015. The Port is in the process of
finalizing the purchase of this coverage for the policy year starting on July 1, 2015, and
expiring on June 30, 2016. Under the current delegation of authority, the CEO has the
authority to purchase the insurance. 
BACKGROUND 
The Port's property policy covers many hazards and perils that can cause direct physical
damage to Port assets and create business interruption. It also includes coverage for direct
physical loss caused by electrical and mechanical equipment (equipment breakdown
coverage). The renewal process for this policy includes updating the Port's underwriter
on current assets, revenue streams, and future capital projects. Claims and losses from the
current policy year and prior policy years are reviewed as well. The Port uses an
insurance broker, Hugh Wood Inc. to help collect and aggregate the renewal data and
then submit the data to incumbent and prospective insurance carriers to obtain quotes for
the renewal. 
The basic elements of the property insurance program consist of a $750 million peroccurrence
limit at a $500,000 per-occurrence deductible. Terrorism coverage is provided
with a sub-limit of $350 million per occurrence. Coverage for flood is capped at an
annual aggregate of $25 million above a flat $500,000 deductible. Property insurance
coverage extends to scheduled assets as well as new assets under construction (up to $50
million in value), including renovations to existing assets. The insurance is purchased on
a replacement cost basis. 
The Port does not purchase earthquake insurance for its property or assets but reviews
this coverage annually. Earthquake insurance is not currently offered at a reasonable cost
nor with adequate limits for the Port to consider purchasing this coverage. In 2014, the
Port reviewed the costs associated with purchasing a catastrophe bond with limits of $100

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
June 9, 2015 
Page 2 of 2 
million. The pricing for the bond exceeded $3 million in additional premium a year. The
bond was deemed to be too costly for the limits offered. 
The assets the Port will renew its property insurance on include assets that will be under
the management of the Northwest Seaport Alliance starting in January 2016. The Port of
Seattle as the current and future owner of these existing assets will purchase property
insurance (i.e., continue to insure) on these assets with this year's property insurance
renewal. The Port of Seattle's cost for the property insurance on these assets will be a
reimbursable expense of the Northwest Seaport Alliance. 
The Port is also working with the project teams on the property insurance for the two
Airport projects, the North Satellite Renovation and Expansion, and the International
Arrivals Facility. Due to the values associated with these projects, property insurance will
be purchased for the value of these assets, while they are being built, through a separate
policy, a builder's risk policy, one policy for each project. When these projects are
completed in the future, they then will be insured under the Port's main property
insurance policy. 
The current state of the insurance markets dictates in a large part the type of pricing that
the Port will obtain on its renewal. Property coverage for the past year has been flat in
terms of the rate per value of insured assets. The property insurance industry as a whole
has a lot of capacity to underwrite risks in 2015, in part due to a low number of natural
catastrophes in 2014.  The Port in the past year has had its insurable values adjusted
upward to approximately $4.75 billion. The value of the Port's insurable assets are the
largest cost driver of the Port's insurance costs. 
Risk Management will review the final quotes and coverage options that our broker
provides and will then consider options to limit or enhance coverage. The goal is to
minimize premium increases but at the same time not under-insure critical property. Risk
Management will review options with division budget and finance to get their input prior
to binding coverage on June 30th. 
The insurance will be renewed on June 30, 2014, at a cost of $1,398,831. Of this amount,
$70,572 is a reimbursable expense to the Rental Car Facility. The renewal cost for July 1,
2015, is anticipated to be between $1,450,000 and $1,500,000. 
ATTACHMENTS TO THIS BRIEFING 
Computer slide presentation. 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
September 30, 2014  Briefing on liability insurance renewal. 
June 24, 2014  Briefing on property insurance renewal.