Marsh client shifts captive insurer after numerous exec trips to visit runs up huge bills

Clean Water Services, the Hillsboro-based public utility that manages wastewater and stormwater systems across much of Washington County, Ore., is tightening its internal spending controls and reshaping parts of its risk-financing structure after months of scrutiny over executive travel and meal expenses.

Over roughly the past eight months, the agency has rolled out a set of measures aimed at limiting discretionary spending and creating clearer guardrails for employees and managers. Among the operational changes: mandatory staff training that sets out what is allowable under Clean Water Services policy and under state and federal requirements; the return of executive purchasing cards, paired with a more formal review of executive expenses by the finance department; and the relocation of the utility’s captive insurer, Clean Water Insurance Company, LLC, from Hawaii to Arizona following a third-party review.

The spending controversy had been building since reporting described recurring annual trips to Hawaii in which agency leaders stayed at luxury properties, with travel costs reaching into the tens of thousands of dollars. That reporting also highlighted the utility’s meal spending: $440,000 over five years on local and travel meals - an amount reported as four times the combined food expenditures of two comparable metropolitan-area agencies over the same period. Amid the fallout, the agency’s chief executive, Diane Taniguchi-Dennis, said she would step down, with her last day set for June 6, 2025. Rick Shanley, the agency’s chief engineer and water technology officer, was later named interim chief executive and general manager.

The utility has announced that it will redomicile its captive to dry, warm Arizona - it remains to be seen how often execs have to visit their captive there.

For insurance and risk professionals, the relocation of the captive stands out as more than a footnote. Clean Water Services relies heavily on a self-insurance approach, using its captive subsidiary to help finance and manage risk tied to an infrastructure portfolio described as roughly $1.5 billion. While captives are common among sophisticated public entities with large, long-tail exposures, the domicile decision can carry practical implications for governance oversight, regulatory engagement, third-party administration arrangements and - importantly in this case - the optics and controls around travel, meetings and vendor relationships.

The agency’s recent changes are expected to be discussed in a public work session scheduled for Tuesday morning, Jan. 13, 2026, at the Charles D. Cameron Public Services Building in Hillsboro. The session follows an internal response to an independent investigator’s findings, and a forensic accounting review by Morones Analytics, which examined training, travel and meal expenses from 2022 through 2024 and part of 2025 for compliance with federal guidelines.

Clean Water Services provides sewer and water management services across a wide geographic patchwork - Banks, Beaverton, Cornelius, Durham, Forest Grove, Gaston, Hillsboro, King City, North Plains, Sherwood, Tigard, Tualatin, portions of Lake Oswego and Portland, and parts of Clackamas and Multnomah counties - serving more than 600,000 people in the urban portions of the Tualatin River Watershed. That footprint, and the criticality of its systems, leave little room for governance missteps: ratepayers ultimately underwrite the agency’s operations, and any perceived laxity in expense discipline can quickly become a reputational and political risk with financial consequences.

The episode also illustrates a familiar dynamic for captive owners: the same organizational sophistication that makes a captive viable - complex budgets, specialized staff, and recurring risk-management routines - can become a vulnerability if approval thresholds and audit trails are unclear. Clean Water Services’ new controls, particularly around purchasing cards and expense review, appear designed to address that weak point directly, with the captive’s domicile move signaling a broader effort to reset oversight practices as the utility tries to rebuild confidence in how it manages public funds and long-lived infrastructure risk.

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