WALLA WALLA -- Two major fires and wind damage totaling $2.5 million in claims over the last three years wreaked havoc on the Port of Walla Walla's insurance.
The public agency will be dropped from its carrier next week, and will have to pay at least triple its former costs to enroll with a new provider for insurance protection, officials said Thursday.
The exact amount the Port will have to pay and to whom has not yet been finalized. But time is running out. The Port will lose its coverage under Enduris, a Washington insurance pool that covers Port, water, fire and other districts across the state, on Tuesday. A special meeting will take place at 4 p.m. on Monday at the Port office, 310 A St., so commissioners can choose a new carrier.
Representatives of Seattle insurance brokerage Hugh Wood Inc. presented six proposals from carriers to Port commissioners at their regular meeting Thursday. Negotiations are still in the works for the best premium and deductible combination. But Thursday's presentation showed the Port will pay significantly more to protect its properties.
The Port previously paid Enduris $77,138 for property/equipment coverage per year. Annual coverage now will likely cost the agency at least $300,000, depending on negotiations.
"Our three-year loss history is very unattractive basically to anyone who would want to insure us," Port Executive Director Jim Kuntz told the three commissioners.
In July 2009 a fire at the Port's Burbank property that housed biodiesel manufacturer Gen-X Energy Group ripped through that building. The fire reportedly started in a portable toilet and spread to Gen-X's production facility. In April 2010 a morning warehouse fire at Reiff Manufacturing was fueled by chemicals used to produce the fiberglass shelters and tanks for which the business is known.
The third claim that added to the Port's costs in recent years came from the former Cliffstar juice manufacturing plant, now known as Cott, after wind destroyed the company's roof.
Port officials say they could not have anticipated the claims. A dismissal from the insurance company not unforeseeable, Commission President Mike Fredrickson said.
"If you have that many accidents in your car, the company asks you to leave," he said.
Nevertheless, the situation has posed a challenge in finding replacement coverage, and the relationship with Enduris over claims was likely irreparably damaged.
In the insurance provider's March 10 meeting minutes, the company listed five reasons for dropping the Port: undue exposure to the pool; a loss history disproportionate to the member's contributions; failure to comply or cooperate with risk management requests; decision-making that is contrary to good government and/or professional behavior; and failure to conform to Enduris' underwriting guidelines.
Walla Walla resident Barlow Corkrum, a challenger for Fredrickson's seat on the commission, asked if there had been any discussion with Enduris on how to get back into the pool.
Kuntz said there hadn't been because Enduris was clear in its communication that the Port is "uninvited" from the pool. He said Port officials believed Enduris underwriters "low-balled" the claims. Consequently, the Port hired its own representatives, who made an argument that the Port should receive more coverage.
"I think they took offense to us questioning the claims," Kuntz said.
In their presentation Thursday, Hugh Wood Inc. officials said 19 potential providers across the globe were invited to submit coverage proposals for the Port. Eleven of those, they said, declined to participate because of the Port's loss history. Two were dismissed because their proposals included deductibles of $1 million or more.
Vicki Hillhouse can be reached at firstname.lastname@example.org or 526-8321.