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Committee clears bill letting water corporations join pooled insurance JPAs to contain rising costs
Summary
AB 428 would allow water corporations to participate in joint powers authorities (JPAs) for pooled insurance; proponents said pooling could reduce premiums and preserve service for small, rural water suppliers facing rapidly rising property insurance costs.
Assemblymember Blanca Rubio presented AB 428 to permit water corporations to participate in joint powers authorities for pooled insurance purposes. Rubio said the bill addresses insurance availability and affordability for water utilities and incorporates language addressing the governor's previous veto message by requiring reinsurance and liability coverage when a water corporation joins a JPA.
Jennifer Lukins, owner of Lukins Brothers Water Company and chair of the California Water Association Small Company Committee, described dramatic insurance cost increases for a small water utility in the Lake Tahoe Basin: from about $43,000 in 2020 to $141,000 in 2021 and $279,000 in 2024 for property insurance alone, despite no claims. Lukins said her customers saw a $48 annual increase in bills in 2024 driven by property insurance costs and urged the committee to pass AB 428 so small systems can access pooled solutions.
Representatives of CalMutuals and a statewide JPA described existing pooled programs that insure hundreds of water and wastewater suppliers and said allowing small investor-owned or private water corporations to join such pools would increase buying power and stabilize rates without creating joint and several liability because pools can be fully reinsured. Supporters included the California Water Association, CalMutuals and labor and local groups. Opposition dropped after negotiated amendments, and the committee advanced the bill. The committee recorded the final vote in the hearing summary as 17 to 0.
Proponents said AB 428 aims to contain insurance costs to avoid rate increases for customers of small water utilities and to preserve service capacity where insurers have limited appetite due to wildfire and other property risk trends.
Votes at a glance: AB 428 — passed out of committee, recorded final tally 17 yes, 0 no.
