15 th Annual ACI Risk Management Conference Session 7 Insurance Certificate Compliance Presented by: Jeff Hollingsworth, Port of Seattle

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1 15 th Annual ACI Risk Management Conference Session 7 Insurance Certificate Compliance Presented by: Jeff Hollingsworth, Port of Seattle Seattle-Tacoma International Airport

2 Determine role of Risk Management Department in Certificate Management Role may vary depending on nature of underlying contract (lease, MOA, purchase, personal or professional service, etc ) Training others to review certificates/endorsements Being clear on underlying requirements Get to know your procurement specialists Consider the trade-offs Risk Report by IRMI, May 2011 Contractual Risk Transfer Is It Worth the Cost 2

review certificates/endorsements Being clear on underlying requirements Get to know your procurement

3 Certificate Management Vendors Use of third party vendors to manage certificates Pros/cons Successful for standard requirements in which basic insurance is specified Entity still has to manage the process of vendor If you have poor internal processes for reviewing and specifying insurance in contracts a vendor will not likely fix that Records retention know your statutory requirements for retaining records 3

of vendor If you have poor internal processes for reviewing and specifying insurance in contracts a

4 Additional Insured v. Contractual Liability Coverage* AI coverage is independent of the indemnity agreement AI is given a defense outside of the policy limits CLC will cover Insured for indemnity obligations in a contract; Property Damage and Bodily Injury No CLC for Coverage B Personal Injury (AI yes) CLC defense costs is part of damages and applies to per occurrence limit Subrogation/AI An advantage for the AI * General Liability Insurance AI 4

outside of the policy limits CLC will cover Insured for indemnity obligations in a contract; Property Damage and

5 Additional Insured* v. Named Insured Differences in reporting responsibilities for claims Named insured has to pay deductibles (AI don t) First Named insured has to pay premium Only one to receive cancellation notice Can cancel policy Receives premium returns Additional Named Insured is not defined and no endorsements exists to add persons as an additional named insured * General Liability 5

deductibles (AI don t) First Named insured has to pay premium Only one to receive cancellation

6 Additional Insured Endorsements* Many different types in form and wording; and many manuscripted forms Versions vary often when updated; many contract requirements refer to older forms HDR Example of COI and AI Harftord.pdf * General Liability 6

when updated; many contract requirements refer to older forms

7 Other Additional Insured Issues How do you handle certificates and endorsements from those who have Self Insured Retentions that are higher that the contractual limits you are asking for? Essentially you would be relying on the indemnity clause and the indemnitor s ability to pay and accept a tender of claim Requires a good knowledge of the other party Common when dealing with large public entities 7

Essentially you would be relying on the indemnity clause and the indemnitor s ability to pay and

8 Certificates for Property Insurance ACCORD 24 and 25 No standard additional insured endorsements Additional insured protected from subrogation (mostly) Loss payee endorsement Covers insurable interest of a lessor Loss payee is not an insured, no policy rights Ask for if you require property insurance as part of a lease or other contract Same issues with cancellation 8

Covers insurable interest of a lessor Loss payee is not an insured, no policy rights Ask for

9 Additional Insured for Auto Insurance Not necessary in most cases but good to specify in requirements to cover situation where a standard commercial auto policy is not in use Most commercial auto forms have a broad definition of who is an insured Definition extends to anyone who is liable for the conduct of any insured Referred to as omnibus clause which covers someone s vicarious liability for someone else s conduct 9

broad definition of who is an insured Definition extends to anyone who is liable for the conduct of any

10 Certificate Management Vendors Use of third party vendors to manage certificates Pros/cons Successful for standard requirements in which basic insurance is specified Entity still has to manage the process of vendor If you have poor internal processes for reviewing and specifying insurance in contracts a vendor will not likely fix that Records retention know your statutory requirements for retaining records 10

11 Cancellation Clause/Certificate Issue Termination and Cancellation - Insurance required under this Lease shall be continuously maintained throughout the duration of the Lease. If Lessee s insurance company cancels or non-renews Lessee s insurance; or if Lessee cancels it s insurance, then Lessee shall procure replacement insurance coverage that meets the requirements of Section xxxx so as to maintain continuous coverage at all times. The Port shall be sent within 10 days of cancellation updated insurance documentation as specified in Section xxxx such that the Port can validate all new, modified or replacement insurance coverage meets the requirements of Section xxxx. 11

If Lessee s insurance company cancels or non-renews Lessee s insurance; or if Lessee cancels it s insurance, then Lessee shall procure replacement insurance coverage

12 Resources IRIC Manual Insurance Requirements In Contracts IRIC[1] docx

13 Work Shop Exercise Scope of Work Sea -Tac South Satellite Building A roofing job, tear down to old base, and replace with a new built up roofing system that will be applied using an adhered insulation system with a fastened down membrane. Cost is $2.5 Million Duration will be three weeks/crews of people Scope includes removal and hauling off old system Job is airside and aircraft will be using gates Contractor will be badged for AOA access

14 Resources General Conditions for Construction General Conditions_Insurance Requirements.pdf Scope of Work Section Summary of Work_GC_ docx

15 Part I: Each Table Shall Determine what coverages you would require Determine what limits you would require Discuss what insurance documentation you would anticipate based on what the General Conditions require How you would handle a request from a contractor who has a $ 2 Million Self Insured Retention for general liability

anticipate based on what the General Conditions require How you would handle a

16 Part II: Review Submittal Comment on the documentation Is it adequate? Anything else you would require? Other comments?

17 Review Documents ACI SC Ins Modification SW pdf SW COI Regency NW.pdf Stop Gap Example.pdf

Insurance Requirements for Contractors (Without Construction Risks)

Insurance Requirements for Contractors (Without Construction Risks) Contractor shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to