On a sunny day in an otherwise dreary spring, Cynthia Adams was catching up with fellow fisherman in Haines’ small boat harbor during the runup to the summer salmon season.
Stepping onto her boat, she apologized for the smell wafting through her 1980s cream-colored, fiberglass sternpicker.
“Sorry,” she said. “It smells a little bit like a fishing boat.”
The vessel, dubbed the Ladyhawke, has earned its scent. Adams has fished for salmon in the Upper Lynn Canal for 25 years. But in that time, all of her costs have soared as fish prices have stagnated.
Amid the squeeze, she said she constantly weighs whether one of those expenses – insurance – is worth it.
“I haven’t had to use it ever and it just keeps going up and up and up,” Adams said. “So you just have to stop and think, OK, is this in my budget? Is this smart?”
Adams said she will pay about $500 per month for crew insurance this season – more than twice what it was several years ago. On top of that, she paid more than $4,000 to insure her boat for the summer. She estimates that’s about four times what it cost when she first started.
Insurance for commercial fishermen has never been cheap. But the cost has risen dramatically in recent years, experts say. The result: major financial strain for fishermen, like Adams, who still pay for it. Others forgo it entirely, leaving them with no financial protection in the case of disaster.
That’s a risky situation, said Susan Erickson, owner of P-W Insurance Inc., an independent insurance agency based in Petersburg.
“If it’s your boat and you’re a one-man operation and your boat sinks, that’s your choice,” Erickson said. “But if you’ve got a deckhand that is injured on your vessel, you are responsible.”
In response, state lawmakers have passed legislation that could provide an alternative path — part of a broader effortto boost the beleaguered industry.
Fewer insurers means higher costs
Soaring premiums aren’t limited to commercial fishing vessels. Homeowners, affordable housing developers, and car owners across the country and world are facing the same issue.
Inflation is among the factors driving the trend. It’s more expensive to repair cars, homes and boats. Meanwhile, natural disasters are intensifying with climate change – and spurring billions of dollars in insured losses every year.
But a major challenge for commercial fishing specifically is that there’s a shrinking set of companies willing to offer policies. That means each insurer is taking on more risk – and can be pickier about who they cover and at what cost.
“There really are now only a handful of reliable, quality underwriters in the marine insurance world. And because of that, there is not a lot of competition. Prices are high, risks are high,” said Maddie Lightsey, who owns Alaska Boats and Permits, a marine brokerage firm based in Homer.
She added that the issue has actually tanked boat purchases before, because potential customers could not find coverage. Without it, banks wouldn’t provide a loan for the sale.
“They thought they had a boat to fish for the season,” Lightsey said. “And they don’t.”
What if fishermen insure themselves?
The issue has grown so urgent that lawmakers are hoping to do something about it. The Alaska Legislature recently passed a bill that seeks to provide fishermen another option.
Gov. Mike Dunleavy has yet to sign the legislation. But if it becomes law, the bill would clear the way for Alaskans to form so-called insurance pools, or co-ops. Those allow each fisherman to contribute a smaller sum of money to a larger pot, which the co-op uses to pay claims.
The bill would do so by exempting the co-ops from state regulations that apply to insurance companies.
Those regulations require insurers to take a range of costly and complicated steps to prove they aren’t discriminating or unreasonably increasing rates. Insurers also have to show they have enough money set aside to pay their customers’ claims.
“We’re talking millions of dollars that they have to show us that they have, and they have to send us audited financials, and they have to allow examinations,” Lori Wing-Heier, Alaska’s top insurance regulator.
Under the legislation, the fishermen-run co-ops wouldn’t have to do that. Instead, they’d insure, govern and regulate themselves. Wing-Heier said that gives extra incentive for the pools to limit members to fishermen with very well maintained vessels – and clean records. But she thinks the opposite would also happen.
“Because they’re here, and they know our fisheries, and they know each other, they will look at an older boat that can’t get insurance and know that boat has been maintained perfectly, and insure it,” Wing-Heier said.
The pools are not a new concept. Fishermen in Washington state have had them for decades. And many fishermen in Alaska – including in Haines and Southeast – have joined in because the savings are so significant.
“It really, truly is sometimes half the cost, or maybe 60% of the cost, or something, compared to private insurance,” said Lightsey, of Alaska Boats and Permits.
The co-ops aren’t necessarily a silver bullet. They’re picky about who joins. And by definition, every member is on the hook for accidents they may have had no role in.
Still, regulators and lawmakers say there’s good reason to clear the way for Alaska-based pools. Among them is State Sen. Jesse Kiehl, who represents Southeast communities including Haines. He sits on a seafood industry-focused legislative task force.
In a recent interview, he said having more insurance options, controlled by Alaskans, can only be a good thing for fishing families.
“Their costs are rising. Runs are not great. Prices are not great,” Kiehl said.
“It’s really tough to make it,” he added. “As the fleet grays, it really needs to be possible for young folks to start up or maintain a new commercial fishing business here in southeast Alaska or anywhere on our state’s coast.”
Back on the Ladyhawke, Adams said she looked into joining a co-op at one point. But at the time, it didn’t seem like the pool would reduce her costs. So she’s continued renewing her policy with a private carrier – and paying more year after year.
“The math doesn’t work in our favor, currently, with those high prices,” she said.
