Legislature(2003 - 2004)
04/29/2003 01:37 PM Senate L&C
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 175-LIABILITY:RECREATIONAL ACTIVITY/BOATS
CHAIR BUNDE announced SB 175 to be up for consideration.
MR. BRAIN HOVE, staff to Senator Seekins, sponsor, said that
Alaska has many recreational opportunities, but the high cost of
liability insurance is a significant factor to existing
enterprises that offer these types of activities. It also
presents a substantial barrier to new businesses, as the vast
majority of existing companies are small firms based in Alaska.
SB 175 delineates the burden of responsibility for the
commercial recreation business, as well as the person who elects
to participate in that activity.
CHAIR BUNDE asked if he could address the concerns of Mr.
Richard Dow with Alaska Resorts and Ms. Tracy Knutson, an
attorney.
MR. HOVE replied that those concerns resulted in the current
committee substitute (CS).
SENATOR SEEKINS moved to adopt CSSB 175, version H, as the
working document. There were no objections and it was so
ordered.
CHAIR BUNDE asked Mr. Hove if the CS adequately addressed the
concerns of Tracy Knutson and Richard Dow.
MR. HOVE replied that it does.
MR. RON PECK, President, Alaska Travel Industry Association,
said the industry has been working for 10 years to improve
reform in recreational liability and supported SB 175.
MR. CHRIS VONIMHOF, Alyeska Resort, said he had been with the
Resort for 30 years and when the ski liability package passed,
it was a tremendous help to their business. Safety is the key to
so many sports and this bill protects both the client and the
operator.
MR. STEVE CONN, Alaska Public Interest Research Group (AkPIRG),
said he is currently a resident of Seward, a community that
depends on many of the activities covered in this bill, although
he doesn't run a recreational activity personally. He said there
seems to be a kind of fever running through the Legislature
where favored persons or businesses are being immunized from all
forms of civil liability. He hoped legislators were prepared to
predict all situations, because they are going back in time and
recreating, through the reintroduction of an old horse in tort
law, contributory negligence, an absolute bar to lawsuits in all
situations - ones involving foreign tourists, elderly tourists,
ones involving less reputable operations that come and go. He
said that currently, Alaska juries have a real disdain for what
they view as a frivolous lawsuit. He thought a law like this
would seriously harm the tourism industry and create very bad
publicity for Alaska's burgeoning recreation industry.
MR. JOHN GEORGE said he was representing himself today, not the
insurance industry. He knows how difficult it is for the smaller
operators or anyone who is doing anything that isn't absolutely
mainstream to get insurance. He thought this bill would go a
long way to easing that by providing relief for the insurance
industry.
MR. BOB DINDINGER, Chairman, Alaska Travel Industry Association,
said he is also the President and CEO of Alaska Travel
Adventures, the state's largest provider of guided recreational
activities handling just under 100,000 clients per year. He said
SB 175 would be very beneficial to this industry, particularly
to the smaller businesses. He said it is always difficult to get
insurance in this state and there has never been more than two
or three underwriters for this type of service. At times there
has been only one underwriter, which led to a 50 percent to 60
percent rate increase per year. If this bill passes, clients,
many from out of state, would still be able to pursue frivolous
lawsuits and they would still be expensive to defend. However,
this legislation would help get those cases thrown out before
companies have to undertake a great deal of expense.
MR. DINDINGER explained that most of the suits are settled for
the deductible of the operator. The insurance company never eats
a dime, because it's very common to have deductibles of $5,000
to $10,000 per incident. The first thing an insurance company
does is offer up the first $5,000 to $10,000. At that point, his
company has to defend itself or agree to pay. This bill will
solve a lot of those frivolous suits and he is hopeful that it
encourages additional underwriters to enter the market.
SENATOR STEVENS asked if frivolous lawsuits happen regularly.
MR. DINDINGER replied about one dozen per year, but in 20 years
of business his company has never had to hospitalize a client.
He has had to pay $50,000 to $100,000 this year in defense of
those types of claims.
SENATOR STEVENS asked if this bill would affect the out-of-state
lawsuits.
MR. DINDINGER replied that it wouldn't.
SENATOR FRENCH asked how this bill would not immunize his
company from poorly trained employees.
MR. DINDINGER replied that it's not mentioned specifically in
the bill. To the extent employees make mistakes, the business is
liable for those mistakes. Those are errors, not inherent risks.
For example, with river rafting, his employees have to take 10
trips down a river under instruction before they can take a paid
client. There is a check-out process as well, and those expenses
would not be diminished by this bill. It is in his best
interests to have very well trained employees and he did not
think they would put attorneys out of business, but litigation
will be reduced. He has defended a lot of rafting incidents and
never lost a case.
SENATOR FRENCH asked what the differences would be from the
common laws that exist now.
MR. DINDINGER replied that this legislation will add clarity and
could be sent to clients in response to the first letter a
company receives in which the client is threatening to file
suit. The company could also send them a copy of the release
they signed saying that they are in good condition and accept
the inherent risks.
SENATOR FRENCH asked if Ms. Knutson has had the opportunity to
look at the CS.
SENATOR SEEKINS said he wasn't sure.
CHAIR BUNDE said that he knew that Mr. Vonimhof had reviewed the
CS and his concerns had been taken care of.
SENATOR SEEKINS noted that this bill goes to his committee,
Judiciary, next and he was sure that Ms. Knutson would contact
him if there were any concerns.
CHAIR BUNDE noted that there was no fiscal note, but that he
assumed one would be forthcoming.
SENATOR SEEKINS said that is correct. He moved to pass CSSB
175(L&C), Version H, from committee with individual
recommendations. SENATORS FRENCH, SEEKINS, STEVENS and BUNDE
voted yea and it moved from committee.
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