Some estimates indicate one in five boat projects have migrated from the U.S. to Canada because of the additional cost of mandating duplicative insurance coverage. The additional insurance requirements imposed by the Longshore Act on some U.S. businesses puts them at a competitive disadvantage to Canadian foreign competition and have cost jobs for American workers as a result.
Keller described a meeting of constituents in the recreational marine industry who came to his office, saying, “One built recreational boats. Another repaired recreational boats. And a third ran a marina. They all had something in common. All of them operated small, family-owned businesses. All of them wanted to hire more employees, and expand their businesses. And all of them had one problem. That is, all of them were forced to pay unnecessary and exorbitant insurance premiums under the Longshore and Harbor Workers Compensation Act.”
Congress in 1984 exempted employees in the recreational boating industry, specifically boats 65 feet and under, from the Longshore Act. Work performed on these boats is instead covered under state workers’ compensation laws. Over the past 20 years, there has been tremendous growth in the number of recreational boats that measure 65 feet or longer, so current law is outdated and arbitrarily imposes additional requirements on some U.S. businesses that put them at a competitive disadvantage to Canadian foreign competition.
Workforce Protections Subcommittee Vice Chair Judy Biggert (R-IL) said, “The practical impact of this limitation has been for thousands of jobs to be lost to other countries because of the increased cost of doing business here at home.”
Larry Nelson, vice president of administration for Westport Shipyard in Westport, Washington, said “By switching to state workers’ compensation coverage, which is two to four times less expensive as Longshore coverage, these small businesses would in many instances use the savings to expand their businesses, expand their workforces and update and enhance their production processes.”
Citing studies that show the safety differences between recreational boat building and Longshore-protected ship building, Nelson said “Workers in the recreational boat building industry do not face the dangers that longshoremen and stevedores face. Rather, they face no greater risks than those faced by other land-based workers in the manufacturing industry. Further, the resources spent on Longshore coverage could be better utilized by the small businesses to strengthen their businesses and their livelihood.”
Kristina Hebert, president of Ward’s Marine Electric in Fort Lauderdale, Florida, said “Due to the high costs of purchasing Longshore insurance premiums, businesses like ours have experienced negative consequences in competing for business. In the case of Florida, many boat owners are choosing to have work done in the Bahamas and Caribbean.” Hebert said one of the main reasons costs are lower is “employers there do not have to pay the extremely high cost of Longshore coverage and can therefore outbid American businesses.”
Hebert concluded by saying “employers like Ward’s Marine Electric would save approximately $200,000 a year by not having to purchase the unnecessary and duplicative Longshore insurance,” and agreed with other witnesses that “This money could instead be used to expand our services, increase our employees’ wages, and hire more skilled workers.”
Ian Greenway, president of LIG Marine Managers, a provider of commercial marine insurance, disputed the notion there was an increased safety risk for boats greater than 65 feet in length that justified the exorbitant expense of Longshore coverage.
“There is no difference in the risks associated with repairing the plumbing, air conditioning or radio on a 75-foot recreational boat as compared to a 65-foot recreational boat,” Greenway testified. “In fact, current insurance data demonstrates that claims for these larger vessels are significantly lower. Claims for workers on vessels of 65-150 feet are at least 38 percent lower than those on vessels under 65 feet. We see not only fewer injuries but also fewer serious injuries in larger recreational boats than we do in their smaller counterparts.”
Greenway concluded by saying the Keller bill would “provide an economic boost to employers, allowing them to expand their operations and hire new employees, all while leaving the traditional Longshore employees unaffected.”
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