Controversial Water Insurance Company Walks Away From Milwaukee

A portion of a lead service line removed from a house on S. 12th St. Photo by Jeramey Jannene.

A proposal for the City of Milwaukee to explicitly endorse a private insurance provider is dead.

Connecticut-based HomeServe is no longer pursuing the city’s endorsement of the company’s sewer and water service line insurance programs. The decision comes following a December veto by Mayor Cavalier Johnson of the idea of even discussing the matter, opposition by the impacted departments and open criticism from the chair of the Common Council’s Public Works Committee.

“They respectfully withdraw. They said their reputation is taking too much of a hit and it’s just not worth it,” said Alderman Russell W. Stamper, II, the lead sponsor, when the council reviewed the mayor’s veto on Wednesday.

HomeServe offers warranties for water and sewer leaks not commonly covered by homeowner’s insurance. The company, endorsed by the National League of Cities, wanted to use the city’s name and logo for marketing its warranty products and to have the city automatically add an up to $1 per month internal leak insurance fee to every municipal services bill. Company representatives said many other cities and other entities have made similar endorsements.

“This is a benefit for the residents,” said Stamper on Dec. 12 when the council narrowly approved a directive for the Milwaukee Water Works and Department of Public Works to negotiate with HomeServe. He said constituents have been hit with bills of up to $10,000 to pay for water and repair water damage from leaks and the insurance would protect them.

The council unanimously sustained the veto, but Stamper encouraged interested colleagues to contact him about working on the issue.

Critics of the proposal previously questioned the need for the warranty and the idea of endorsing a private company.

“The departments indicated that there is very few of the kinds of incidents that this warranty program actually protects against, and that has been the experience of other cities,” said Ald. Robert Bauman, the lead opponent. The Public Works Committee spent substantial time debating the matter on Nov. 29, with committee chair Bauman calling it a “scam from top to bottom” after the discussion. He said the company does very well wining and dining elected officials at its hospitality suite during the National League of Cities conference.

But the alderman said his real concern was not the merits, but the endorsement the city was being asked to make. “I think, as a matter of policy, we should think very hard before we allow for-profit companies to use our name as an endorsement,” said Bauman.

The mayor echoed Bauman’s reasoning. “My veto reflects concerns with accountability, transparency and commitment in regard to services provided,” wrote Johnson.

The company was seeking sell a water line protection program for $7 per month and a sewer line protection program for $9 per month. It sought the city’s endorsement of this because it said its market penetration would thereby grow from 0.5% to 10-to-12%.