Utah water districts' insurance premiums fluctuate with global, national disasters

SALT LAKE CITY — Flooding and tornadoes in the Midwest, Missouri hurricanes and tsunamis in Japan are a marching line of global and national disasters that are contributing to an increasingly skittish insurance market when it comes to water structures such as canals, dams or treatment plants.

While it's typical to see fluctuations in the local market driven by events thousands of miles away, if not on another continent, some in the industry expect premiums for water districts and other water entities to be on the uptick for the foreseeable future.

"Beyond the complexity of the question that goes to who is at fault," when a dam, canal or major water system experiences a failure of sorts, broker Steve Handley said some carriers are getting a case of the jitters driven by a conservative market.

"There's concern about a catastrophic event, that maintenance and inspections could be falling behind" on aging infrastructure that needs repairs, Handley said.

The issue of increased worry over the insurability of water carriers came up this spring during a meeting of the Weber Basin Water Conservancy District's Board of Trustees, where Handley explained a 4 percent bump in rates in the renewal cycle.

Weber Basin's district buys insurance from Glatfelter Public Practice, which is one of the largest carriers in the United States for entities that treat, distribute or store water.

Handley said the premium wasn't going up because of any claims issue or because the district is at greater risk, but simply because of the number of natural disasters unfolding and perceptions about adequate maintenance overall.

Weber's general manager Tage Flint said he wasn't surprised at the increase.

"Water districts are being viewed a little bit differently by insurance companies, not based on claims, but because we are a specialty item," Flint said. "We're singled out and at least reviewed more often because of that nature of specialty."

For insurance purposes, Flint's district is lumped into the same category as a small canal company with only a few dozen shareholders or with something as expansive as the Central Utah Water Conservancy District, a wholesale water supplier which is the largest water district in the state.

Handley said, too, there may have been some concern on the part of carriers because of Utah's record-breaking water year and how canals, aqueducts and other components of a water delivery system would fare with such increased flows.