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Committee clears bill allowing Alaska-based commercial fishing insurance cooperatives
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Summary
The Senate Labor and Commerce Committee reported House Bill 116 to a future joint session with individual recommendations, approving language to allow Alaska-based commercial fishing insurance cooperatives to operate outside Title 21 regulation.
The Senate Labor and Commerce Committee reported House Bill 116 from committee without objection after a second hearing in which sponsors and the state insurance director explained the bill’s intent and regulatory consequences.
House Bill 116, presented by staff to Representative Louise Stutes, Matt Greening, would permit commercial fishermen to form cooperative insurance agreements to pay claims for liability or vessel damage without being regulated under Title 21 (Alaska’s insurance code). Greening told the committee the change is intended to lower costs and improve access to insurance for Alaska’s commercial fishing fleet amid rising premiums and selective underwriting. He said three insurance pools currently insure about 840 vessels that operate in Alaska, and the bill “comes to no cost to the state and simply allows these organizations that are based in Alaska to form.”
Senator Dunbar asked about practical differences between the proposed Alaska-based co-ops and the existing arrangements. Greening said co-ops would not be subject to Title 21 requirements such as minimum capital requirements or audits by the Department of Commerce; instead the groups would be member-owned and “self-police.” He identified the existing arrangements as managed outside Alaska by organizations that include the Prince William Sound purse seiners and other regional pools.
Laurie Wing Hyer, director of the Division of Insurance, told the committee the division expects governing boards of any Alaska-based co-ops to perform due diligence and set appropriate rates so pools remain solvent. She said regulators had reviewed the Prince William Sound purse seine operations and found them successful. Wing Hyer noted that many of the vessels in question are insured through markets outside Alaska (she said some are insured out of London) and therefore would not be members of Alaska’s guaranty association in any event. The director characterized the likely structure as having an executive director and board of governors to handle complaints and governance.
The committee heard no public testimony. After discussion, a motion to report HB116 with individual recommendations and an attached zero fiscal note passed by unanimous consent. Committee members were asked to stay after adjournment to sign the committee report.
What’s next: HB116 will advance to a future joint session for consideration; committee and agency staff signaled they expect the market and industry groups to create and govern any Alaska-based pools.
