Port of Walla Walla insurance premium nearly triples with new carrier

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WALLA WALLA -- The Port of Walla Walla is paying nearly triple the cost to insure its property and equipment after being terminated from its risk-sharing pool at the beginning of September.

Spokane-based government risk pool Enduris ended the Port's coverage and a new plan took effect immediately with New Jersey-based AXIS Insurance.

The new annual premium for Port and airport property and equipment from AXIS is $218,074 -- up from $77,138 under Enduris. That coverage includes all major airport and Port buildings, Port Executive Director Jim Kuntz said.

He said the agency's smaller buildings will be self-insured for now. The Port's new deductible is $500,000 -- 20 times more than Enduris' $25,000 deductible.

The switch comes after $2.5 million in claims from fires at Gen-X Energy and Reiff Manufacturing and wind damage at the former Crown Cork & Seal building and former Cliffstar plant, now known as Cott, over the past three years.

Enduris said it had been willing to work with the Port in mid-2010, after the claims were filed, to continue coverage if its risk-management requests were met.

But Port officials say they had no idea of any noncompliance. In its termination notice to the Port in May Enduris did not specify reasons for the decision.

Furthermore, Port officials say the relationship with Enduris was more likely fractured because the Port was the first agency to ever challenge the risk pool's initial settlement proposals through arbitration.

"The Port Commission has an obligation to the taxpayers of Walla Walla County to obtain fair settlements," Kuntz said via email. "In the process of fighting for fair settlements we alienated Enduris, and they determined our loss history was disproportionate to our contributions."

Port Commission President Mike Fredrickson has said the termination from Enduris was not necessarily a surprise given the number of claims since the Port joined the risk pool four years ago. He was surprised, however, to read that Enduris' meeting minutes hint at a possible other reason for termination.

An initial story in the Union-Bulletin reported the risk pool 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.

To clarify, termination can be based on those factors. Enduris Executive Director Mark Kammers said the Port did not necessarily meet all five. However, he said the Port posed undue exposure to the pool; had a loss history disproportionate to its contributions; failed to comply with requests; and failed to conform to underwriting guidelines.

The latter two were a surprise to Port officials.

Kammers, however, referenced a July 2010 letter to the Port as evidence that said the Port was expected to hire a consultant to review a transfer of risk in the Port's lease agreements. The letter said it would be helpful if the Port provided Enduris a copy of the contract with the consultant and the scope of work.

Kammers said the Port did not respond to the letter. Kuntz and Fredrickson said that's not true.

"The work was done as requested by Mark Kammers," Kuntz wrote in an email to the U-B. "What is not clear in my records was if he or other Enduris staff members received the scope of services."

He said he had no reason to believe Kammers hadn't received it because Enduris in September 2010 renewed the Port for another year.

He said the July 2010 letter also indicated Enduris would contact the Port to arrange appraisals. Kuntz said Enduris never followed through on those.

AXIS Insurance's rates, though far higher than what Enduris charged, are significantly cheaper than earlier quotes by companies willing to take on the Port as a client. The agency's three-year loss history posed a challenge in finding competitive rates.

Representatives of the Seattle office of brokerage firm Hugh Wood Inc. invited 19 potential providers around the globe 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.

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