Gulf Coast ports are turning more frequently to single insurance brokers for all their needs in a bid to get better rates from a limited number of underwriters, risk managers said.

A broker can go to several underwriters to get a competitive quote, while an agent may often only go to one underwriter.The latest to turn to a single broker, or broker of record, is the Port of Brownsville, the closest Texas seaport to Mexico. The port expects to receive proposals on Sept. 20 and make a decision in early October.

"It's more of a professional-service contract rather than a straight bid," explained C. James Kruse, port chief for the Brownsville Navigation District.

Using Corpus Christi's Model

Brownsville is patterning its program after one adopted last year by the nearby Port of Corpus Christi. Instead of putting property and liability coverage out to bid, the port wants a broker to represent its interests in all insurance matters.

Currently, when bidding occurs it is essentially a race to get to the underwriter first. The underwriter, often one at Lloyd's of London, will give just one quote.

"That's not how we want to play the game," Mr. Kruse said.

He would prefer having a broker work with several underwriters to get a better price.

Brownsville decided to experiment with a broker of record because insurance contracts are coming due later this year, and a program in Corpus Christi has appeared to work wonders.

"We were able to get a more comprehensive property program with a lower deductible on the storm side of it, which is our big risk here," said David Solis, risk manager for the Port of Corpus Christi. "We saw a pretty good savings, a 40 percent savings."

Corpus Christi adopted the broker-of-record program after seeing the Port of Houston achieve similar success, he said. Corpus Christi currently has its brokers - a team of Hilb, Rogal & Hamilton Co. and Rollins Huding Hall of Pennsylvania Inc. - working on a renewal of general-liability programs.


"You're giving them license to generally scour the world for you," Mr. Solis said of his brokers of record.

The Corpus Christi model being followed by Brownsville calls for a request for proposals, after the establishment by port authorities of minimum requirements and clear goals. The broker of record works on a fee basis instead of commissions.

In the case of Corpus Christi, the port has a major grain elevator and oil docks it wanted to insure, given the frequency of windstorms. Brownsville faces similar weather risks and will open a new oil dock on Sept. 11, in addition to its numerous bulk activities.

As Brownsville and Corpus Christi prepare to renew coverage plans, they are entering an insurance market that is reeling from catastrophes in recent years.

"Because of these large global catastrophes, the insurance markets have hardened and you need a specialist who can go out there and argue for you," said Mr. Solis. "They have better access to the larger insurers."

Expecting the worst, Brownsville hopes a broker of record will help hold down what are expected to be increased costs.


"We've been told that the market has gone up 35 percent this year, and we may see a whopping increase this year," said Mr. Kruse. "It's a market adjustment, everybody out there is raising rates."

While a new trend on the Gulf Coast, brokers of record have been around for about a decade. During an insurance crisis a decade ago when ports could not get coverage, the American Association of Port Authorities worked with the Seattle firm Fred S. James to create a multiport marketing plan.

Some 85 ports agreed to be covered under the plan, said Port of Cleveland Executive Director Gary Failor, a former AAPA chairman who was involved in

finding coverage at the time.

Brokers of record are important, "especially when you have a soft insurance market," he said.

Many Gulf Coast ports were able to get coverage a decade ago and did not need to join the multiport plan, which still exists.


The move to brokers along the Gulf Coast does not necessarily reflect an end to the use of local agents, said Mr. Solis. Corpus Christi still works with agents for smaller areas of coverage, for such matters as auto liability and several bond issues.

But general liability, property and umbrella liability will stay with brokers of record.

"A lot of public employers are beginning to explore the arena of brokers of record and get away from the local agents," Mr. Solis said. "The proof is in the pudding; we saw a 40 percent reduction in our premiums."