Legislature(2019 - 2020)BELTZ 105 (TSBldg)
03/05/2019 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing(s): | |
| SB61 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | SB 61 | TELECONFERENCED | |
SB 61-COMM FISHERMEN'S FUND:VESSEL OWNER CLAIMS
1:46:46 PM
CHAIR REINBOLD reconvened the meeting. She announced that the
final order of business would be SENATE BILL NO. 61, "An Act
relating to claims against protection and indemnity insurance
policies of vessel owners."
1:46:58 PM
SENATOR COSTELLO clarified that the committee would be taking up
the original version of the bill. Senator Bishop objected for
discussion purposes.
1:47:39 PM
SENATOR GARY STEVENS, Alaska State Legislature, as sponsor,
paraphrased from his sponsor statement. He said that the
Workers' Compensation Fishermen's Fund is also known as the
Commercial Fishermen's Fund (CFF) and is commonly called the
"Fishermen's Fund." It serves as a fallback for insurance and
workers' compensation for commercial fishermen who are injured
on the job. The CFF is self-funded from a portion of the
commercial fishing licensure fees and the fund is intended to be
insurance of last resort. This bill, SB 61, makes a small change
to allow the Commercial Fishermen's Fund to pay the full
deductible, up to $5,000, for the holder of Protection &
Indemnity (P&I) insurance. He suggested that this policy shift
should be beneficial to all stakeholders.
Relating to Claims Against Protection and Indemnity
Insurance Policies of Vessel Owners
Access to health insurance and health care is a
concern among fishermen and especially presents an
obstacle to those younger fishermen seeking to
continue the next generation in Alaska's sustainable
fisheries.
Alaska's Territorial leaders recognized the
significance of the fishing industry in 1951 with the
creation the Commercial Fisherman's Fund (CFF) "to
provide for the care of sick and disabled fishermen"
working in Alaska's fishing fleet.
The fund was capitalized with an initial appropriation
of $5,000 and has since proven successful in serving
as workers' compensation for injured fishermen.
Benefits paid by the CFF have continued to be financed
using a portion of the commercial fishing licensure
fees paid to the State. Over the years, the CFF has
remained stable as it fulfills the goals of the fund,
providing medical relief for crewmen injured on the
job. The CFF has in fact grown even as health care
costs have risen, due in part to continuing
improvements in fishing industry safety.
Meanwhile another protection available for fishing
vessels and vessel owners, is their optional
enrollment in private Protection & Indemnity (P&I)
policy insurance, to fully cover crewmembers in the
event of an injury or illness at sea. As an incentive
and reward for vessel owners to carry P&I insurance,
in 2010 the Alaska Legislature adopted a policy
allowing the CFF to pay out 50% of a P&I policy
holder's deductible, up to $5,000, when a claim for
benefits is made to both the CFF and the P&I of the
vessel owner. The 50% deductible cap was made
experimentally to protect the solvency of the CFF.
Consistent revenue from commercial fishing license
fees, coupled with well-managed claims against the
CFF, have demonstrated an added incentive for vessel
owners to obtain P&I insurance is justified. Senate
Bill 61 would allow the CFF to pay the full
deductible, up to $5000, for the holder of P&I
insurance. This policy shift is not projected to
jeopardize the sustainability of the CFF and should
prove to be a win for all stakeholders, including the
State of Alaska. Thank you for your consideration of
this important legislation.
1:48:50 PM
TIM LAMKIN, Staff, Senator Gary Stevens, Alaska State
Legislature, stated this bill has been before the legislature
previously. He said the program is a popular and fully
functional one. He provided background for the fund, that in
2010, the legislature passed a bill to provide an incentive for
vessel owners to provide insurance on their vessels and to help
cover their crew. At the time the incentive was put in place, it
provided a provision to allow vessel owners 50 percent of their
deductible on the protection & indemnity (P&I) insurance as an
incentive to provide liability insurance. This was an
experimental proposal and was monitored to ensure the change did
not weaken the solvency of the fund. Under SB 61, the proposal
would allow vessel owners reimbursement for the deductible at
100 percent, up to $5,000. This reimbursement would be funded
from the Commercial Fisherman's Fund (CFF), he said.
1:51:58 PM
MR. LAMKIN referred to the sectional analysis of SB 61, which
read as follows:
Sec. 1: AS 23.35.145 (1) If a fisherman files a claim
for benefits under the Commercial Fisherman's Fund
(CFF) program, and also files a claim against a vessel
owner's protection and indemnity (P&I) insurance, the
vessel owner is entitled to receive a benefit from the
CFF equivalent to 100% of the P&I deductible, up to
$5,000. This is a change from it being 50% of the
deductible.
1:52:30 PM
CHAIR REINBOLD opened public testimony on SB 61.
1:52:47 PM
BOB KEHOE, Executive Director, Purse Seine Vessel Owners
Association, stated he also serves as vice-president of the
United Fisherman of Alaska (UFA). He offered PSVOA's support for
the bill and asked committee members to please support SB 61.
He provided background information on the Purse Seine Vessel
Owners Association (PSVOA), which is a commercial fishing trade
association that represents the small boat fleet operating
throughout Alaska and the West Coast. The PSVOA manages three
fishermen-owned marine insurance pools with 900 member vessels.
All profits generated by these marine-insurance pools are
distributed back to its members. This helps to keep costs down
for property and liability (P&I) insurance. He explained that
P&I insurance is "a fancy word" for liability insurance.
MR. KEHOE stated that this bill would expand on the
legislature's efforts in 2010 to provide a financial incentive
to vessel owners to provide P&I insurance to fully cover crew
members in the event of an injury. The Commercial Fisherman's
Fund (CFF) is meant to be a fund of last resort, he said. The
benefits are limited to $10,000, but the board has the
discretion to award more money in certain instances, he said.
He said that vessel owners are not required by law to carry
insurance for their crewmembers. This is different than
shoreside employers who are required by law to insure their
employees under the state workers' compensation system. In
addition, the cost of vessel insurance is relatively high
compared to rates paid by shoreside employers. For example, a
purse seine operation typically consists of four crewmembers,
and the cost to insure the crew can be as high as $400 per month
per crewmember. As small independent business owners, the cost
of liability insurance is a major fixed cost, he said.
He said that this bill will ease the financial burden on vessel
owners to pay the cost of P&I insurance, by paying the
deductible in the event of an injury. It will further promote
the goal to ensure that all of the medical needs of an injured
crewmember will be satisfied. In closing, he respectfully
requested that the committee support moving the bill forward.
1:55:51 PM
SENATOR BIRCH referred to the fiscal note analysis. He related
that from FY 14-17 the fund averaged about seven claims per
year.
MR. KEHOE deferred to the Fishermen's Fund Advisory and Appeals
Council to respond. He believed that the number of injuries is a
much higher figure. He surmised the figure might refer to vessel
owners who applied for this benefit. He acknowledged that
fishing can be a dangerous occupation, but efforts are underway
to continuously improve the fishing industry's safety.
1:58:19 PM
SENATOR BIRCH acknowledged that seven claims seemed pretty low.
He asked for further clarification on the figures.
1:58:52 PM
GREY MITCHELL, Director, Division of Workers' Compensation,
Central office, Department of Labor and Workforce Development
(DOLWD), explained that essentially two groups can potentially
make claims against the Commercial Fisherman's Fund (CFF). He
explained that 39 percent of resident crewmember license fees,
currently a $60 fee, are deposited into the Commercial
Fishermen's Fund to cover the cost of medical care in case of an
injury. The fund covers fishermen who are not covered by other
insurance when the vessel owner does not have a P&I policy, he
said. He said the CFF is not just crewmembers' last resort, but
their only resort. Benefits are limited to $10,000 and any
additional benefits must be approved by the Fishermen's Fund
Advisory and Appeals Council. He said requests happen more
frequently as medical costs continue to increase, and many
claims exceed the $10,000 threshold.
He said vessel owners who have P&I insurance must pay a
deductible when a claim is made against the policy. This bill,
SB 61, would adjust the reimbursement for vessel owners from 50
percent to 100 percent, up to a maximum of $5,000. He explained
that the CFF's benefits for injured crewmembers working for
vessel owners with P&I are capped at $5,000. Benefits for
injured crewmembers who are uninsured are capped at $10,000, he
said. These are the two groups who benefit from the CFF, he
said.
2:01:48 PM
MR. MITCHELL said the fiscal note identified the average of
seven claims, but that figure is increasing. Reimbursement of
the deductible amount is an effort to incentivize more vessel
owners to carry P&I insurance, he said. Currently, when
uninsured crewmembers get injured, their only recourse is to
apply to the CFF, and their benefits are capped at $10,000. When
vessel owners have P&I insurance, their crewmembers potentially
have coverage for the full cost of their medical costs and also
indemnity benefits that may cover lost wages.
He explained that in the past five years, an average of seven
individual [vessel owners] came forward for reimbursement of the
deductible costs. He suggested the annual number of claims for
injured crewmembers is closer to 300, but the administrator of
the fund can speak to the details.
SENATOR BISHOP interjected that the current number of claims is
273 claims.
REPRESENTATIVE BIRCH asked for further clarification on the
number of crewmembers in the state.
2:03:13 PM
MR. MITCHELL responded that roughly 10,000 crewmembers obtain
resident or non-resident commercial fishing licenses annually.
The CFF receives its revenue from two sources, crewmember
license fees and vessel owner permit fees. He said that 39
percent of nonresident crewmember license fees of $280, capped
at $50, and resident commercial crewmember license fees of $60
are transferred to the CFF. The remainder of commercial
crewmember license fees fund Alaska Department of Fish and Game
(ADF&G) and Commercial Fisheries Entry Commission (CFEC)
programs. Another source of revenue for the Commercial
Fishermen's Fund is from vessel permit fees on an estimated
8,000-10,000 vessel owners, also capped at $50.
2:05:38 PM
SENATOR BISHOP asked whether he was comfortable with the fiscal
note from the Department of Labor and Workforce Development
(DOLWD).
MR. MITCHELL answered yes, but he acknowledged that it is
difficult to estimate the increased liability to the fund.
2:06:07 PM
VELMA THOMAS, Program Coordinator, Workers' Compensation
Fishermen's Fund; Fishermen's Fund Advisory and Appeals Council,
Division of Workers' Compensation, Department of Labor and
Workforce Development (DOLWD), stated she did not foresee a
significant impact on the Fishermen's Fund in the next few
years. The number of claims has decreased over the years, in
part, due to additional safety training for commercial fishermen
or perhaps because more fishermen have their own personal
insurance.
2:06:46 PM
SENATOR BISHOP agreed. He stated that there has been a 100
percent decrease in claims over a four-year period.
2:07:08 PM
SENATOR GRAY-JACKSON asked whether there are instances in which
a crewmember is hurt but does not file a claim.
MS. THOMAS answered that it is possible. She said that the
division only tracks statistics on fishermen who file claims,
via the medical providers, such as Providence or Bartlett
Memorial Hospital. Most providers have packets to hand out to
commercial fishermen who are injured, but some crewmembers fish
for a season and then go out of state and never file a claim.
2:08:25 PM
CHAIR REINBOLD opened public testimony on SB 61.
2:08:36 PM
FRANCIS LEACH, Executive Director, United Fishermen of Alaska
(UFA), said that UFA is the largest statewide fishing trade
association, representing 35 commercial fishing organizations
and hundreds of commercial fishermen and crewmembers
participating in state and federal waters in the state. She said
that the UFA supports SB 61. She thanked the sponsor, Senator
Stevens, for bringing this bill forward. She said that
crewmembers working on commercial fishing vessels are not
covered under the Alaska Workers' Compensation System. If a
crewmember is injured while working on a vessel, the person is
entitled to receive benefits from his/her employer as
established under federal maritime law. These benefits include
payment of the crewmember's medical bills for treatment of work-
related injuries. This bill will enable commercial fishing
vessel owners to purchase insurance for their crewmembers, which
is always a good thing in this line of work since injuries can
and do happen. In closing, she said that members should have a
letter of support from the UFA in their packets.
2:10:10 PM
CLAY BEZENEK, Member, Fishermen's Fund Advisory and Appeals
Council (FFAAC), Division of Workers' Compensation, Department
of Labor and Workforce Development (DOLWD), said that he serves
on the FFAAC. He said he is also a member of UFA and the United
Southeast Alaska Gillnetters. He offered his support for SB 61.
He stated that the legislature passed a bill in 2010 that
increased the deductible limit. At the time, the council had
concerns as "shepherd-keepers of the fund" about the possibility
of an inordinate number of claims against the CFF so the council
and legislature put stop gaps in the bill to protect the fund.
MR. BEZENEK referred to SB 61 as a housekeeping measure. The
council expressed some concern that a significant number of P&I
claims might happen by raising the claim threshold. However, the
council ran a lot of scenarios and projections and feels
comfortable the fund is adequately protected. He said the P&I
insurance holders are acting responsibly by carrying insurance
for their crewmembers. They should have their deductibles
covered and not have additional financial burden, he said.
2:12:35 PM
CHAIR REINBOLD closed public testimony on SB 61.
2:12:56 PM
SENATOR BISHOP asked for further clarification on whether the
sponsor wants an effective date.
MR. LAMPKIN said he was not sure it is necessary. In response to
an earlier question, he referred Senator Birch to a document in
members' packets titled, "Fisherman Fund Fact Sheet."
2:13:46 PM
CHAIR REINBOLD asked Senator Bishop to review the fiscal note.
2:13:59 PM
SENATOR BISHOP briefly reviewed the fiscal note from the
Department of Labor and Workforce Development (DOLWD). He said
that the appropriation is to [the Division of] Workers'
Compensation, the allocation is the Fishermen's Fund, and the
Office of Management and Budget (OMB) component number is 343.
The fund source is 1032, Fishermen's Fund, Designated General
Fund (DGF), in the amount of $16,100 from FY 20 to FY 25. The
fiscal note analysis indicates that there is sufficient revenue
in the Fishermen's Fund to cover this increased liability, he
said.
2:15:22 PM
SENATOR BISHOP removed his objection.
2:15:28 PM
SENATOR COSTELLO moved to report SB 61, work order 31-LS0528\A,
from committee with individual recommendations and attached
fiscal note. There being no objection, SB 61 was reported from
the Senate Labor and Commerce Standing Committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| L&C Real Estate Appraisers Resume - Stetson.pdf |
SL&C 3/5/2019 1:30:00 PM |
Governor's Appointees to Boards and Commissions |
| L&C Board of Nursing Resume - Connelly.pdf |
SL&C 3/5/2019 1:30:00 PM |
Governor's Appointees to Boards and Commissions |
| L&C Board of Nursing Resume - Dieters.pdf |
SL&C 3/5/2019 1:30:00 PM |
Governor's Appointees to Boards and Commissions |
| SB61 Ver. A.pdf |
SL&C 3/5/2019 1:30:00 PM |
SB 61 |
| SB61 Sponsor Statement 02.27.19.pdf |
SFIN 3/27/2019 9:00:00 AM SL&C 3/5/2019 1:30:00 PM |
SB 61 |
| SB61 Sectional Version A.pdf |
SFIN 3/27/2019 9:00:00 AM SL&C 3/5/2019 1:30:00 PM |
SB 61 |
| SB 61 Fishermens Fund - Research Fact Sheet - 03.01.19.pdf |
SFIN 3/27/2019 9:00:00 AM SL&C 3/5/2019 1:30:00 PM |
SB 61 |
| SB061-DOLWD-FF-03-01-19.pdf |
SL&C 3/5/2019 1:30:00 PM |
SB 61 |
| SB 61 Support Letter SEAFA.pdf |
SFIN 3/27/2019 9:00:00 AM SL&C 3/5/2019 1:30:00 PM |
SB 61 |
| SB 61 Support Letter PSVOA.pdf |
SFIN 3/27/2019 9:00:00 AM SL&C 3/5/2019 1:30:00 PM |
SB 61 |
| SB 61 Support Letter UFA.pdf |
SFIN 3/27/2019 9:00:00 AM SL&C 3/5/2019 1:30:00 PM |
SB 61 |