7b supp
Item No.: 7b_supp Meeting Date: June 24, 2014 Property Insurance Renewal Update Outline Structure of Property Insurance Cost Re-Cap Coverage Details and Cost Factors Earthquake Coverage Notes Renewal Projection for July 1, 2014 2 Current Structure of Property Program (Main Limits Insured Per Occurrence Unless Noted) $750 Million Multi Peril Coverage Limit $25 Million Flood Limit (Annual) $50 Million Course of Construction Limit $350 Million Terrorism $100 Million Equipment Breakdown $100 Million Business Interruption 3 Current Structure of Property Program (Major Deductibles Per Occurrence) $500,000 Fire and Extended Coverage $1,000,000 Flood $50,000 Course of Construction $25,000 Fine Arts $1,000,000 Equipment Breakdown 4 $5,000,000 Property Insurance Premium versus Port Insurable Values $4,500,000 $4,000,000 Property Insurance Premium $3,500,000 Property Value x $1000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $- 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 est 5 Coverage Details Annual Policy July 1st through June 30th Fire and Extended Coverage Wind, Spills, Collapse, Impact, and Explosion Covers Equipment Breakdown Mechanical/Electrical Equipment Covers Owned, Leased, Rented Property Example Applied to leased generators Covers Business Interruption If Due to a Loss Covered by the Policy 6 Coverage Details Annual Policy July 1st through June 30th Covers Flood Excludes Land Movement/Earthquake Covers Terrorism Covers Projects Under Construction * All subject to exclusions either by peril, location, or type of property 7 Property Insurance Cost Factors Rates depend on: Total Insurable Values Reported: Appraisals 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 Earthquake Insurance Challenges Low limits compared to values at risk Past loss history with Nisqually in 2001 New modeling used by insurers Port has high insurable values Port has aggregation of values Insurers with aggregation of values locally Port did look and review pricing on a catastrophe bond; but pricing too costly Property Renewal Forecast (For July 1, 2014) Estimated renewal premium of $1.51 Million Will bind coverage on June 30th Final proposal/cost will depend on: Final adjustment of insured property values Final estimation of capital projects for 2014-2015 Changes, if any, to program structure (deductibles/coverage/limits) Negotiation with the underwriters 10
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