Item 5b Memo

Item No.  5b 
Date of Meeting  May 12, 2009 
DATE:     April 22, 2009 
TO:       Tay Yoshitani, Chief Executive Officer 
FROM:    Jeff Hollingsworth, Risk Manager 

SUBJECT:    Insurance Brokering Services-Property and Casualty Insurance 
Request authorization for the Chief Executive Officer to enter into an agreement with insurance
brokerage firms for the purposes of procuring property and casualty insurance for the Port at an
estimated cost of $790,000 over a three year period. The selection of the brokerage firms will
utilize a competitive process. 
The purpose of this memorandum is to notify Commission of the Port's intention to undergo a
competitive broker selection process. The broker(s) will be used to procure property and liability
insurance for the Port. Property insurance expires on June 30, 2009 and liability insurance
expires on September 30, 2009.   Upon selection of the broker(s), the Port will utilize the
broker(s) to submit insurance marketing information, applications, and specifications to various
insurance markets to solicit bids on insurance coverage.  The broker will be licensed in
accordance with RCW 48.17 and authorized to serve as a broker (agent) of the Port in these
transactions. Premium payments for insurance will be paid directly to the broker who in turn
will pay the insurance companies. The brokers will also provide on-going service throughout the
policy year in other areas such as notice of claim submissions, issuing of bonds, policy reviews,
endorsement issuance, insurance certificate issuance, and amending schedules of insured
property as Port property assets are added (or deleted). The selected broker(s) will have the right
to procure insurance for the Port in 2010 and 2011 at the Port's option. The Port's insurance
renews annually.

T. Yoshitani, Chief Executive Officer 
May 12, 2009 
Page 2 of 3 

The Port has purchased property insurance through Alliant Services since 2005. The cost of the
expiring property insurance is $1.26 million and has averaged roughly $1.4 million over the past
five years. The premium includes annual broker servicing fees of roughly $140,000 per year. 
The Port currently purchases liability insurance annually through two brokers, Hugh Wood
Incorporated and Tyrisco. The Port has used Hugh Wood Incorporated since 2006 and will have
paid them $215,000 in total servicing fees by October 1, 2009. The Port pays roughly $650,000
of annual liability insurance premium to Hugh Wood Incorporated. The Port purchases its
remaining liability insurance through Tyrisco. The Port pays Tyrisco roughly $140,000 for the
procurement of insurance and pays them roughly $9,000 in service fees.

The Port wishes to competitively bid for broker services for the purposes of procuring property
insurance by July 1, 2009 and liability insurance by October 1, 2009.  A request for proposal
will be issued from which the Port will select one or more brokers.   The Port's liability
insurance coverage's will be broken out in pieces to allow small businesses to participate in the
selection process.
The services the broker(s) will provide include:
a.  Submission of marketing specifications to various insurance markets for the purposes of
soliciting quotes on coverage from qualified and financially solvent insurance markets. 
b.  The execution all insurance purchase transactions in both the admitted and surplus
markets. P remiums will be paid to the broker who in turn pays the respective insurance
c.  Serve as the Port's insurance broker of record. Insurance transactions have to be done by
licensed and bonded brokers or agents as defined in the Revised Code Washington.
d.  Issue any endorsements, bonds, insurance certificates, and notices of claim. 
e.  Monitor the financial solvency of insurance companies at the Port and replace carriers as
f.   Provide property insurance supports services such as loss control, valuation, and
underwriting studies.

T. Yoshitani, Chief Executive Officer 
May 12, 2009 
Page 3 of 3 

g.  Review new contracts upon request in which the Port is being asked to indemnity and
insure the other party to the agreement. 
The estimated cost of the insurance and associated servicing fees are as follows: 
a.  July 1, 2009  Property insurance at $1.5 million with $160,000 for service fees. 
b.  October 1, 2009  Liability insurance at $850,000 with $100,000 for service fees 
c.  July 1, 2010 - Property insurance at $1.6 million with $160,000 for service fees. 
d.  October 1, 2010 - Liability insurance at $850,000 with $100,000 for service fees 
e.  July 1, 2011 - Property insurance at $1.8 million with $170,000 for service fees. 
f.   October 1, 2011 - Liability insurance at $950,000 with $100,000 for service fees 
The procurement of insurance for the three years is estimated at $7.55 million for the combined
property and casualty coverage with an estimated additional $790,000 for broker services.
None as insurance services were exempt from commission approval under prior Port Policy
PUR-2. The commission received updates on the Port's insurance program, including cost of
coverage in 2008 and 2007.

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