04/02/2019 10:00 AM House FISHERIES

        HB 105-COMM FISHERMEN'S FUND:VESSEL OWNER CLAIMS                                                                    
                                                                                                                                
10:51:43 AM                                                                                                                   
                                                                                                                                
CHAIR STUTES announced that the  final order of business would be                                                               
HOUSE  BILL  NO.   105,  "An  Act  relating   to  claims  against                                                               
protection and indemnity insurance policies of vessel owners."                                                                  
                                                                                                                                
10:52:26 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  DAN ORTIZ,  Alaska  State  Legislature, as  prime                                                               
sponsor of HB  105, said that the proposed  legislation was heard                                                               
in a  prior session and was  based on the Fishermen's  Fund which                                                               
was created  in 1951.  The  fund provided the treatment  and care                                                               
of Alaska's  licensed and commercial  fishermen who  were injured                                                               
while fishing, on  shore or offshore, in Alaska.   It was created                                                               
by fishermen, for fishermen, from  a portion of every fishermen's                                                               
license fee.   He explained that in 2010  the legislature amended                                                               
the fishermen's funds statutes to allow  a vessel owner to file a                                                               
claim against the  fund for 50 percent of  the owner's protection                                                               
and  indemnity insurance  deductible  from the  fund.   A  vessel                                                               
owner could file a claim if  an injured crew member filed a claim                                                               
against  both  the  fishermen's   fund  and  the  vessel  owner's                                                               
insurance.  He  told the committee the idea behind  this was that                                                               
the fishermen's fund was essentially a  payor of last resort.  If                                                               
a  vessel owner  carries  protection and  indemnity insurance  to                                                               
fully cover a  crew members  medical expenses in the  event of an                                                               
injury, then there  would be a reduced burden  on the fishermen's                                                               
fund.   Representative  Ortiz said  HB 105  would allow  a vessel                                                               
owner to  fully recover the  protection and  indemnity deductible                                                               
from  the fund  up to  the amount  of $5000.   He  reiterated the                                                               
fishermen's fund is self-funded by the fishermen.                                                                               
                                                                                                                                
10:55:12 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  KOPP asked  if  there had  been  any modeling  of                                                               
claims in  order to  know what  was paid  out of  the fishermen's                                                               
fund over a period of time.                                                                                                     
                                                                                                                                
REPRESENTATIVE  ORTIZ  shared  what  the fund  had  paid  out  on                                                               
deductibles between  2014 and 2017.   He said  the sustainability                                                               
of the  fund would remain  intact and overall performance  of the                                                               
fund would  be the  same if HB  105 passed.   He shared  that the                                                               
fund  managers  are  responsible  for making  sure  the  fund  is                                                               
sustainable, and they support the bill.                                                                                         
                                                                                                                                
10:57:38 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE VANCE asked how much  money was in the Fishermen's                                                               
Fund and what the annual contribution to the fund was.                                                                          
                                                                                                                                
10:57:58 AM                                                                                                                   
                                                                                                                                
LIZ  HARPOLD,  Staff,  Representative  Dan  Ortiz,  Alaska  State                                                               
Legislature,  explained that  the current  value of  the fund  is                                                               
$11.7 million,  and the  ten-year average value  of the  fund had                                                               
been around $11.5  million.  She continued her  answer by sharing                                                               
that about $1.1 million goes into  the fund annually.  In further                                                               
response to Representative Kopp's  question, she stated that last                                                               
year there  were 110 crew member  claims that were filed  in 2018                                                               
and paid  out for a little  over $500,000 total.   In 2017, there                                                               
were 924 crew  member claims, with a value paid  out of just over                                                               
$731,000.  She explained that crew  member claims are quite a bit                                                               
higher  than   vessel  owner  claims;  therefore,   shifting  the                                                               
financial  burden  to the  vessel  owner's  insurance would  help                                                               
protect the fund.                                                                                                               
                                                                                                                                
10:58:49 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS  asked for  clarification  whether                                                               
the fiscal note was correct because  it seemed like a small price                                                               
to pay.                                                                                                                         
                                                                                                                                
MS.  HARPOLD expressed  agreement  that the  fiscal  note of  $16                                                               
thousand was a small price for a great benefit.                                                                                 
                                                                                                                                
11:00:06 AM                                                                                                                   
                                                                                                                                
CHAIR STUTES opened invited testimony on HB 105.                                                                                
                                                                                                                                
11:00:27 AM                                                                                                                   
                                                                                                                                
BOB  KEHOE,   Executive  Director,  Purse  Seine   Vessel  Owners                                                               
Association, told  the committee  his organization  managed three                                                               
fishermen-owned marine  insurance pools,  and profits  created by                                                               
the  pools were  distributed back  to  the pool  members to  help                                                               
control  the  cost  of  liability  insurance.  He  continued  his                                                               
testimony  by saying  the Purse  Seine Vessel  Owners Association                                                               
supported  the   bill  and   thanked  Representative   Ortiz  for                                                               
sponsoring the bill.                                                                                                            
                                                                                                                                
11:03:11 AM                                                                                                                   
                                                                                                                                
CLAY BEZENEK,  Commercial Fisherman, reported that  he had served                                                               
on the Fishermen's Fund Board in  the past.  He explained that in                                                               
2009  the board  introduced  similar legislation  to the  current                                                               
bill.  He testified in support of HB 105.                                                                                       
                                                                                                                                
11:05:54 AM                                                                                                                   
                                                                                                                                
FRANCES LEACH,  Executive Director,  United Fishermen  of Alaska,                                                               
said that  United Fishermen  of Alaska  would like  to be  on the                                                               
record in  support of HB 105,  and on behalf of  the organization                                                               
she thanked  Representative Ortiz for bringing  the bill forward.                                                               
She said  the bill  provided additional  incentive for  owners to                                                               
purchase liability insurance  for crew members in  order to cover                                                               
the full  cost of an  injured crew  members  medical care  in the                                                               
event of an injury, rather than relying on the fishermen's fund.                                                                
                                                                                                                                
11:07:19 AM                                                                                                                   
                                                                                                                                
CHAIR  STUTES  opened   public  testimony  on  HB   105.    After                                                               
determining  that no  one wished  to testify,  she closed  public                                                               
testimony.                                                                                                                      
                                                                                                                                
11:07:41 AM                                                                                                                   
                                                                                                                                
CHAIR STUTES announced that HB 105 was held over.