Legislature(2019 - 2020)ADAMS ROOM 519
04/24/2019 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB30 | |
| SB61 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 30 | TELECONFERENCED | |
| + | SB 61 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 61
"An Act relating to claims against protection and
indemnity insurance policies of vessel owners."
2:39:27 PM
SENATOR GARY STEVENS, BILL SPONSOR, thanked the committee
for hearing the bill and gave credit to Vice-Chair Ortiz
who had helped significantly with the legislation. He
reported that the bill affected commercial fishermen and
people who worked on fishing vessels. He relayed that the
Commercial Fisherman's Fund served as a fall back for
insurance for commercial fishermen who were hurt on the
job. The fund had existed since statehood and was self-
funded. Fishermen paid into the fund with a portion of
their licensing fees. The bill also addressed protection
and indemnity (P and I) insurance, liability insurance. He
expounded that it was a policy held by the vessel owner and
covered their assets and crew.
Senator Stevens continued that the incentive of the bill
was to take the pressure off the Commercial Fisherman's
Fund. More claims would be filed against the owner's P and
I insurance and less on the fund. It was capped at $5,000.
He believed the legislation was a win for all stake
holders. He deferred to his staff to answer any questions.
2:42:08 PM
Co-Chair Wilson OPENED Public Testimony.
TIM LAMKIN, AIDE, SENATOR STEVENS, indicated Ms. Leach had
another hearing to attend and could not make it to the
meeting. He reported that she submitted written testimony
on the bill on behalf of United Fishermen of Alaska.
Co-Chair Wilson commented that people could listen to the
previous hearing to listen to her testimony in favor of the
bill.
2:42:40 PM
BOB KEHOE, EXECUTIVE DIRECTOR, PURSE SEINE VESSEL OWNERS
ASSOCIATION (PSVOA) (via teleconference), testified in
strong support for SB 61. The Purse Seine Vessel Owners
Association was a commercial fishing trade association
representing the small boat fleet operating throughout
Alaska and the West Coast. Among other things PSVOA managed
three fisherman-owned marine insurance pools which included
approximately 900 member vessels. All profits generated by
the marine insurance pools were distributed back to
membership which helped to keep down the cost of hull and
liability insurance for the small boats and business
owners.
Mr. Kehoe explained that SB 61 expanded upon the
legislature's efforts in 2010 to provide a financial
incentive to vessel owners to obtain insurance to fully
cover their crew members in case of an injury. Maritime
seamen were not covered by state workers' compensation
laws. Vessel owners were not required by law to carry
insurance for their crew members. It was different for
shoreside employers who were required by law to insure
their employees under the state workers' compensation
system.
Mr. Kehoe relayed that the cost of vessel insurance was
relatively high compared to the rates paid by shoreside
employers. For example, a purse seine operation typically
had 4 crew members and the cost of insuring the crew could
be as high as $400 per man per month. As small independent
business owners, the cost of liability insurance was a
major fixed cost. The bill would ease the financial burden
on vessel owners in paying the cost of insurance. For
instance, when a claim was submitted, they would be able to
recover up to $5,000 of their deductible. He believed the
bill would promote the goal of insuring all of the medical
needs of an injured crew member were satisfied. On behalf
of PSVOA he respectfully asked the committee to support the
bill by moving it forward. He was available for questions.
2:45:43 PM
CLAY BEZENEK, MEMBER, FISHERMEN'S FUND ADVISORY AND APPEALS
COUNCIL (via teleconference), mentioned that he wore many
hats. He spoke of passing legislation in 2007 or 2009 to
raise limits of $10,000 for insurance claims to modernize
the fund. There were several stop-gaps incorporated to
protect the fund. He realized that the large boat operators
and some of the small boat operators were being penalized
for having insurance coverage because they had to pay the
full deductible for their P and I coverage. Whereas, if a
person did not carry insurance, the State of Alaska
automatically paid the first $10,000 from the Commercial
Fisherman's Fund. He supported the actions of all involved.
He thanked Representative Ortiz and Senator Stevens and
their staff. He reiterated his support for SB 61.
2:47:21 PM
Co-Chair Wilson CLOSED Public Testimony.
2:47:34 PM
AT EASE
2:50:41 PM
RECONVENED
Co-Chair Wilson indicated the fiscal note that would be
reviewed was dated March 6, 2019 and had the OMB component
number 343. She directed Mr. Mitchell to review the fiscal
note.
GREY MITCHELL, DIRECTOR, DIVISION OF WORKERS' COMPENSATION,
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, reported
that the fiscal note had a small impact in the amount of
$16,100 per year. The amount was based on the history from
FY 14 through FY 17 of 7 claims per year from the vessel
owners who had P and I policies who were requesting
reimbursement of their deductible cost. He reported that
the average deductible cost for the historical period was
$4,600. He explained that by taking half of the $4,600 and
multiplying the number by 7 equaled the $16,100 amount.
There was sufficient revenue in the fund to cover the
costs. There was a fund balance of between $11 million and
$12 million. Even if there was a spike in claims, the
department expected there would be sufficient revenues to
pay the costs.
Representative LeBon asked if the public was in support of
the bill. Mr. Mitchell had only heard support for the bill.
Co-Chair Wilson asked if the department supported the bill.
Mr. Mitchell reported that the administration was neutral
on the bill.
Co-Chair Wilson asked why the administration was only
neutral. Mr. Mitchell replied that there were some good
things about the bill. The bill encouraged vessel owners to
purchase P and I insurance which provided a better
insurance coverage for crew members. He conveyed that the
P and I policies could exceed far more than the $10,000 in
the benefits they provided per incident. The state and its
Commercial Fisherman's Fund program limited benefits to
$10,000 per incident and were also limited to just medical
costs. Some P and I policies also provided for lost wages
in addition to medical costs. It was more of a workers'
compensation program than the Commercial Fisherman's Fund
program.
Co-Chair Wilson explained the acronym, P and I.
Representative Carpenter asked about the total fund
revenues. He wondered if the revenues came from earnings.
Mr. Mitchell responded in the negative. He clarified that
the revenues came from a fee from all of the people who
purchased fishing licenses and all of the permit fees
collected by the Commercial Fishing Entry Commission. He
conveyed that 39 percent of the value of the fees went into
the Commercial Fishermen's Fund to pay the benefits.
Representative Carpenter asked about the investment of the
$11 million fund. He asked if the fund was gaining
interest. Mr. Mitchell answered that there was some
investment. He deferred to Ms. Thomas.
2:55:16 PM
VELMA THOMAS, PROGRAM COORDINATOR, FISHERMEN'S FUND,
DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, responded
that it was part of the General Fund and Other Non-
Segregated Investments Fund. There were earnings that
collected interest and were distributed based on a formula.
There were earnings as well as losses depending on the
market.
Co-Chair Wilson asked if the $11 million could be used for
anything else. Mr. Mitchell responded that the fund was
established before statehood and the constitution. It was
grandfathered in as a dedicated fund and had not been used
for anything other than paying benefits to fishing claims.
Co-Chair Wilson relayed that amendments were due Thursday,
April 25, 2019 by 5:00 p.m. She reviewed the agenda for the
following meeting.
SB 61 was HEARD and HELD in committee for further
consideration.