Legislature(2025 - 2026)GRUENBERG 120
03/04/2025 10:30 AM House FISHERIES
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| Audio | Topic |
|---|---|
| Start | |
| HB117 | |
| HB116 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 117 | TELECONFERENCED | |
| *+ | HB 116 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 116-COMMERCIAL FISHING INSURANCE CO-OP
11:14:11 AM
CHAIR STUTES announced that the final order of business would be
HOUSE BILL NO. 116, "An Act exempting from insurance regulation
cooperative agreements entered into by two or more people
engaged in commercial fishing for the purpose of paying claims
or losses."
11:14:35 AM
MATT GRUENING, Staff, Representative Louise Stutes, Alaska State
Legislature, introduced HB 116, on behalf of the House Special
Committee on Fisheries by request of the Joint Legislative
Seafood Industry Taskforce. He said this bill would allow for
member owned commercial fishing insurance cooperatives. This
would exempt them from Title 21, the states insurance code. He
said there are already three insurance pools operating in
Alaska, but they are based out of an organization in Washington
State. This is the Purse Seine Vessel Owners Association, which
includes the Seine Vessels Reserve, the Southeast Alaska
Fishermen's Alliance Reserve, and the Bristol Bay Reserve.
Between all three insurance pools there are approximately 840
vessels. He noted that rising premiums and availability of
insurance serve as an operating barrier for Alaska's aging
commercial fishing fleet. Underwriters have been raising
premiums on individual vessels and have become increasingly
selective regarding which vessels get selected for insurance.
MR. GRUENING explained that insurance pooling can provide a more
attractive and lower risk alternative for underwriters than
insuring individual vessels. Additionally, it would generate
lower insurance costs for fishermen. He remarked that some of
the benefits of a commercial fisherman-owned pool could be:
lower premiums, the ability to structure itself to meet the
needs of the fishing industry ,such as licensing unique vessels
that would otherwise not qualify for standard insurance; a board
of directors, who are both fisherman and members, which would
give localized control; and lastly offer dividends to fishermen.
He noted that with operating costs at an all-time high and
fishing markets at an all-time low, HB 116 aims to provide lower
cost and easier access to insurance alternatives to Alaska's
commercial fishing fleet.
11:17:05 AM
CHAIR STUTES announced that the committee would hear invited
testimony on HB 116.
11:17:23 AM
TRACY WELSH, Executive Director, United Fishermen of Alaska,
testified in supports of HB 116. She said that United Fisherman
of Alaska (UFA) support the concept of HB 116. She explained
that UFA has not had a chance to hold a meeting to review the
bill but supports the idea. She said that UFA had provided a
kitchen sink worth of ideas to the taskforce and one of these
ideas was insurance. She said that insurance is among the
largest costs that a fishing operation incurs throughout the
year, and it has been increasing.
11:18:20 AM
REPRESENTATIVE VANCE asked whether UFA had discussed forming its
own insurance pool.
MS. WELSH responded that the idea of a UFA insurance pool has
been discussed but she does not believe there are any immediate
plans to do so.
11:18:46 AM
REPRESENTATIVE MCCABE asked Director Lori Wing-Heier if
insurance pools were an effective way to go and, if so, could
they be utilized in other areas as well. He was interested to
hear her opinion and whether it was a viable alternative for
fishermen.
11:19:10 AM
LORI WING-HEIER, Director, Division of Insurance, Department of
Commerce, Community and Economic Development, said that after
discussions she did not know whether it was going to make things
cheaper. She said that capital would need to be put up, claims
would need to be adjudicated, and there would need to be legal
counsel, since vessels are under maritime law not state law.
She opined that there would be "humps" that would need to be
navigated. She said that insurance is high right now across the
nation and people are looking for alternative ideas. She said
the downside of new insurance ideas is solvency, something needs
to be available to pay claims until books balance out. She
opined that more research is required for determining how it
would work in Alaska, and that ten vessels would not be enough.
Enough money would need to be generated to support claims. She
said it could work, but it would need time to be brought
together.
CHAIR STUTES noted that this legislation does not create the
pool but simply allows fishing entities to create a pool. There
is no liability to the state itself.
REPRESENTATIVE MCCABE noted that HB 116 is permissive
legislation that allows the fishermen to "get together" to form
pools. He asked how Washington State did it and whether they
were backed by an insurance company and what insurance companies
think of this.
CHAIR STUTES remarked that this question may be better answered
by Bob Kehoe.
11:22:26 AM
BOB KEHOE, Executive Director, Purse Seine Vessel Owners
Association, said that insurance pools work by vessel owners
getting together, coming to an agreement, and group insuring
their vessels. He said that premiums are charged to do two
things: to pay the claims that arise during a policy year and
secondly, to purchase a layer of insurance above the self-
insured deductible. He said that addresses the issue of
solvency, he said that someone would not want to be in a
situation where they can't pay claims. He said that in his
experience, underwriters often like this. He said it is a
premium game and a way for underwriters to get substantial
premium but mitigate their risks by spreading it out amongst a
group of different vessels.
REPRESENTATIVE MCCABE asked if there was any self-policing
amongst insurance holders.
MR. KEHOE responded that this was correct. He said that Mr.
Gruening made the point that a Board of Directors is comprised
of vessel owners using the pool. He said that they take the
role seriously and review vessels to ensure safety. He said
that at the end of the day, when sharing a risk, it becomes
one's own business with regards to other vessels and how they
conduct themselves.
11:25:49 AM
REPRESENTATIVE VANCE asked whether the state could offer
insurance for the fishermen and said that she liked the concept
of pooled insurance. She asked why this method is considered
the most advisable.
MS. WING-HEIER said that when the Division of Insurance was
brought into the matter, they looked at why the cost was so high
and what the alternatives were. She said that there were
already a couple successful insurance pools that were set up in
the state. This includes the Alaska Rural Electric Cooperative
and the Alaska Municipal League. The thought for the division
was whether the fishermen could do something similar; the answer
is yes. She said that it can be done but it requires statutory
authority to do so, taking insurance out of Title 21. She said
that there is a lot of work to do before it can be determined
how successful this program could be.
REPRESENTATIVE VANCE commented that it is amazing how the
fishery has been so important prior to statehood and now and
there was never this permission in statute. She hoped that
there would be some people who could take advantage of this.
11:28:37 AM
MR. GRUENING, in response to comments by Ms. Wing-Heier, said
that there is nothing that guarantees that insurance pooling
would work. However, as a former member of the Southeast Alaska
Fishermen's Alliance Reserve, he felt it was managed well, and
his insurance was cheaper, and his insurance costs kept going
down. He said if the pools are managed well, they can be
successful.
11:29:32 AM
REPRESENTATIVE HIMSCHOOT remarked that one of her staffers was
in an insurance pool and opined that the Board of Directors was
composed of members and the Board requires new applicants to
provide a reference from existing members. She said that there
is some self-policing with regards to managing the pools.
11:29:57 AM
REPRESENTATIVE MCCABE commented that he was wondering how the
state can get the fisherman to come back to Alaska from
Washington and maybe the proposed legislation would help.
11:30:32 AM
CHAIR STUTES announced that HB 116 was held over.