PORT OF SEATTLE
MEMORANDUM
COMMISSION AGENDA
Item No.
5c
Date of Meeting
February 1, 2011
DATE: January 24, 2011
TO: Tay Yoshitani, Chief Executive Officer
FROM: Jeff Hollingsworth, Risk Manager
SUBJECT: Insurance Brokering Services - Liability Insurance Program
Amount of This Request: $385,000 Source of Funds: General Fund
Total Contract Cost: $385,000 Estimated Jobs Created: ½ FTE
ACTION REQUESTED:
Request authorization for the Chief Executive Officer to execute a contract with an insurance
brokerage firm for the purpose of procuring liability insurance for the Port over a three-year
period with two one-year extension options. The procurement of liability broker services
insurance for the three years plus the two one year renewal options is estimated at $385,000. The
selection of the brokerage firms will utilize a competitive process.
SYNOPSIS
The purpose of this memorandum is to obtain Commission authorization for the CEO to execute
a contract for insurance brokerage services to assist the Port in the purchase of liability insurance
services. The current liability insurance for the Port expires on September 30, 2011. Upon
selection of the broker, the Port will utilize the broker to submit insurance marketing
information, applications, and specifications to various insurance markets to solicit bids on
liability 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
broker will also provide on-going service throughout the policy year in other areas such as notice
of claim submissions, claim evaluation and consulting, loss prevention, contract reviews,
issuance of bonds, coverage reviews, endorsement issuance, and insurance certificate issuance.
The scope of work will be in effect in 2011 through 2013 with two additional one-year extension
options for 2014 and 2015 (insurance to expire on September 30, 2016). The Port’s liability
COMMISSION AGENDA
T. Yoshitani, Chief Executive Officer
January 24, 2011
Page 2 of 3
insurance renews annually and is purchased prior to or no later than October 1 for the ensuing 12
months.
BACKGROUND
The Port is currently using Alliant Services for the purchase of liability insurance (through
9/30/2011) and has used Alliant since 2009. Alliant is currently partnering with a qualified small
business insurance broker for the procurement of some of the purchased insurance. Prior to 2009,
the Port utilized the services of Hugh Wood, Incorporated and another qualified small business,
Tyrisco, for the purchase of its liability insurance. The cost of the expiring 12-month liability
insurance premium is roughly $685,000. Liability insurance premiums have averaged roughly
$775,000 per year over the past five years. The Port has paid its liability broker on average
roughly $65,000 per year over the past five years.
SCOPE OF WORK REQUESTED:
The Port will competitively procure the broker services for procuring liability insurance.
The services the broker(s) will provide include:
a. The utilization of a qualified small business, minority owned business, or disadvantaged
business enterprise, are being evaluated. If there are small business opportunities
available, they will be included in the process.
b. Submission of marketing specifications to various insurance markets for the purposes of
soliciting quotes on coverage from qualified and financially solvent insurance markets.
c. Evaluate alternative risk financing possibilities in lieu of standard liabiltiy coverage.
d. The execution all insurance purchase transactions in both the admitted and surplus
markets. Premiums will be paid to the broker who in turn pays the respective insurance
companies.
e. 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.
f. Issue any endorsements, bonds, insurance certificates, and notices of claim.
g. Monitor the financial solvency of insurance companies at the Port and replace carriers as
needed. Identify and evaluate new insurance carriers who are proposing on Port business.
COMMISSION AGENDA
T. Yoshitani, Chief Executive Officer
January 24, 2011
Page 3 of 3
h. Provide insurance support services in the area of loss control and underwriting studies.
i. Review new contracts upon request in which the Port is being asked to indemnity and
insure the other party to the agreement.
FINANCIAL IMPLICATIONS
The estimated cost of the liability insurance and associated servicing fees are as follows:
a. October 1, 2011 - Liability insurance at $700,000 with $75,000 for service fees
b. October 1, 2012 - Liability insurance at $710,000 with $75,000 for service fees
c. October 1, 2013 - Liability insurance at $720,000 with $75,000 for service fees
Option to Extend – Two One Year Terms
d. October 1, 2014 - Liability insurance at $720,000 with $80,000 for service fees
e. October 1, 2015 - Liability insurance at $730,000 with $80,000 for service fees
The request for authorization is only for the broker service fees and not for purchase of
insurance. The purchase of insurance is delegated to the Chief Executive Officer under
Resolution 3605 and does not require additional approval.
PREVIOUS COMMISSION ACTION
The commission approved a similar request for broker services at the May 12, 2009 Commission
Meeting.
