North Little Rock City Leaders Promote Utility Line Warranties

by Kate Knable  on Monday, Oct. 22, 2012 12:00 am  

Alderman Maurice Taylor of North Little Rock pushed for an agreement with Service Line Warranties of America. His constituents “have nothing but good to say” about the warranties offered, Taylor said.  (Photo by Michael Pirnique)

North Little Rock did not seek proposals from any other utility warranty companies, so it’s impossible to say whether the price being offered to residents is competitive.

Insurance policies very rarely cover damage to outdoor water and sewer lines between a house and its connections to the city systems, according to Roger Ward, an owner of Arkansas Best Insurance Corp. in Hot Springs. Most policies cover damage to a home but not repairs of the line break that caused the damage, Ward said.

The marketing arrangement is a hallmark of how SLWA operates its residential water and sewer line warranty programs. The company offers the warranties only in cities that allow the company to promote its services using the city’s name.

In exchange, SLWA either pays the cities 10 or 12 percentage of annual warranty premiums or, as in North Little Rock’s case, applies a discount to enrollees’ annual rates.

The company’s first round of promotional letters, sent out in the spring, attracted 1,588 North Little Rock enrollees in the sewer line warranty program.

The water line warranty program, begun in September, doesn’t have anyone enrolled in Arkansas yet.

How It Works
North Little Rock doesn’t oversee the utility warranty programs.

“It’s not the city’s program,” Taylor said. “The city basically endorsed it. The citizens have the choice to purchase it or not purchase it. It’s completely hands-off for the city.”

SLWA buys a mailing list from a list vendor, sends promotional mailings and monthly or yearly bills and hires local contractors to make needed repairs.

Brad Carmichael, vice president of business development for Utility Service Partners, explained the business model. Utility Service Partners, doing business as Service Line Warranties of America, belongs to Macquarie Capital, which is part of the publicly traded Macquarie Group.

“We don’t actually enroll customers unless we have a relationship with the city,” Carmichael said. “We want to partner with the city in order to be able to use their logo on the marketing materials that we send to the residents. Our experience has found that will increase participation.”

That participation tends to involve about 25 percent of a city’s residents within three years of a program’s launch, he said.

 

 

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