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

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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

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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

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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


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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
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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)

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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 )

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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
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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

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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
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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)
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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

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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.

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