2l8 ORGANIZING SCIENTIFIC RESEARCH FOR WAR 



newals, the danger of lapse through inadvertence, etc., contractors normally 

 insured an employee for the full remaining policy term. Insurance for a 

 shorter term was placed when it was clear that the proposed assured would 

 be engaged in extra-hazardous activities for a shorter period of time and 

 there was no probability that any other persons would perform extra- 

 hazardous work under the pertinent contract. Since substitutions with 

 premium credits were permitted under the Master Policy, this system 

 allowed the contractor to maintain a separate running account with the 

 company for each OSRD contract. An attempt to treat all contracts with 

 the same contractor as a group was abandoned as unsatisfactory in practice. 



A superficially vexing problem was presented by the fact that OSRD 

 contracts were normally written for fairly short periods (usually six months), 

 with an informal understanding that in all probability they would be re- 

 newed for at least a similar period. It would have been manifestly dis- 

 advantageous for contractors to have taken out insurance for a period not 

 exceeding the then existing term of the contract with subsequent renewals 

 from time to time. Such a system would present not only administrative 

 complications but also substantial risks of lapse. Contractors frequendy 

 continued work when no formal contract supplement was in existence while 

 awaiting formal approval and execution of the necessary documents. The 

 insurance remained in force at such times. 



Experience under the Master Policy was favorable from an actuarial point 

 of view. With the favorable turn of the war, the insurance situation became 

 easier and it became possible to obtain a policy carrying a lower premium 

 rate. Transfer of some OSRD contracts to the Navy was under discussion 

 and the Navy was confronted with the necessity of finding an insurance 

 plan comparable to that of OSRD. On its own behalf and on behalf of 

 OSRD the Navy began negotiations which eventually resulted in the issu- 

 ance of Master Policy FD-502 by the Indemnity Insurance Company of 

 North America to the Navy Department, under which world-wide, extra- 

 hazardous insurance was available in the principal amounts of $5000, 

 $10,000, and $20,000 for individual certificates and at a premium rate of 

 $62 per year for $10,000 of insurance. The provisions of the new policy 

 closely resembled those of the earlier one. 



In view of the lower premium rate and broader geographical coverage 

 of the new policy, extra-hazardous insurance requested by OSRD contractors 

 subsequent to April i, 1945, and approved by OSRD was placed under the 

 new Master Policy. Insurance under the Fidelity and Casualty Company 

 Master Policy was cancelled and coverage was transferred to the new carrier 

 in appropriate cases. 



To benefit by the coverage under the Master Policy the Government 

 representative negotiating a particular contract determined whether the 

 contractor's employees would perform such extra-hazardous activities that 



