7b Supp
ITEM NO: 7b_Supp DATE OF MEETING:__6//28/2011______ Presented 6/28/2011 Jeff Hollingsworth, Risk Manager Outline Property Insurance Program Recap Structure of Property Insurance Property Insurance Cost Factors Insurance for Capital Projects Property Insurance Challenges Renewal Projection for July 1, 2011 2 Current Structure of Property Program (Major Deductibles Per Occurrence) $500,000 Million Fire and Extended Coverage $500,000 Million Flood $50,000 Course of Construction $25,000 Fine Arts $100,000 Equipment Breakdown 3 Current Structure of Property Program (Main Limits Insured Per Occurrence Unless Noted) $1 Billion Fire/Extended Coverage Limit; $25 Million Flood Limit (Annual) $50Million Course of Construction Limit $350 Million Terrorism $100 Million Equipment Breakdown $100 Million Business Interruption 4 Current Structure of Property Program First $25 Million with Lexington (Chartis) Excess coverage with various Lloyds Syndicates A+++ Rating Procured by Alliant Insurance 5 Property Insurance Cost Re-Cap 2011 Estimate $5,000,000 $4,500,000 Property Insurance Premium Property Value x $1000 $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 2010 2011 Est 6 Property Insurance Coverage 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 7 Property Insurance Coverage 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 8 Property Insurance Cost Factors Rates depend on: Total Insurable Values Reported: Appraisals (Done 2010 and 2011) 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 ) 9 Aviation Property Losses Total Property Damage- Collections 2005 Losses = $140,000 Recovery = $104,000 2006 Losses = $280,000 Recovery = $115,000 2007 Losses = $94,000 Recovery = $87,000 2008 Losses = $113,000 Recovery = $96,000 2009 Losses = $34,000 Recovery = $18,000 2010 Losses = $72,000 Recovery = $45,000 2011 Losses = 12,000 Recovery = $11,000 Collection Recovery ~ 64% 10 Non-Aviation Property Losses Total Property Damage Collections 2005 Losses = $9,000 Recovery = $3,500 2006 Losses = $61,000 Recovery = $45,000 2007 Losses = $42,000 Recovery = $26,000 2008 Losses = $67,000 Recovery = $33,000 2009 Losses < $1,000 2010 Losses < $2,000 2011 Losses None Year To Date Collection Recovery ~ 60% Excludes T-86 Spout Losses in 2006 and 2007 11 Insurance for Capital Projects Insurance Provided : Coverage For Projects less than $50 Million in Value Aviation Capital Current Values ~ $ 88 Million* Non-Aviation Capital Costs ~ $24 Million * * Deductible of $50,000 Includes interests of contractors Rental Car Facility*** Port has a separate policy for this project Insured to $280 Million including earthquake East Marginal Grade Separation Project Port has a separate policy for this project Insured to $20 Million including earthquake * Excludes Rental Car Facility ** Excludes East Marginal Way Grade Separation ***Will be on Port's main property insurance schedule upon completion 12 Earthquake Insurance Challenges Low limits compared to values at risk Past loss history with Nisqually in 2001 Less capacity due to 2010-2011 events New modeling used by insurers Port has high insurable values Port has aggregation of values Insurers with aggregation of values Port is not having coverage quoted. 13 Property Renewal Forecast July 1, 2011 Port has budgeted $1.35 Million for renewal Final proposal will depend on: Final rate offered to Port per $100 of insured value; Final property values used for renewal to include 2010 appraisals Final estimation of capital projects for 2011-2012; Will increase due to Rental Car Facility Renewal range estimated to be between $1.3 Million to $1.4 Million; If no major changes to program structure (deductibles/coverage) No purchase of earthquake coverage/FEMA still a source of funds 14
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