in the Gulf Area. Similarly lov? percentages apply to noninsurance 

 for protection and indemnity risk in New England and California, 

 although in the Gulf Area it amounts to 8o percent on a tonnage 

 basis and 76 percent on a market value basis. 



Noninsurance, as a means of minimizing out-of-pocket expenses 

 of operating a commercial fishing vessel, may be an indication of 

 unsound business practices. If the saved premium is larger than 

 the losses sustained during a period of years, the realized gains 

 together with other imputed costs, (managerial salaries, deprecia- 

 tion and borrowed capital) if not properly estimated, may lead to 

 a false sense of prosperity. This situation may prolong the exist- 

 ence of inefficient fishing vessels and overcapacity in the industry 

 to the disadvantage of all fishing operr.tors. Contrastingly, if the 

 saved premium is much less than the sustained losses, disaster hits 

 the noninsured owner with the maximum severity while the adjustment 

 of the industry's overcapacity to demand is carried out in the most 

 disadvantageous way for the economy. 



The sum and substance of the occurrence of noninsurance, seems to 

 revolve around two pivotal points quite prevalent among small vessel 

 owners. One is the realization that the premiijm for insurance protec- 

 tion is a postponable ssmifixed cost of fishing operations. The other 

 is the lack of understanding, of the meaning of insurance protection 

 and the principles which govern insurable risks. Insurance protection 

 as a semifixed cost is regressive, inversely associated with gross 

 receipts from fish landings. As a postponable expense, noninsurance 

 is intimately related to small scale fishing operations, which may be 

 marginal or submarginal ajid to the general economic conditions and 

 basic structure of the fishing industry. The second pivotal point, 

 namely lack of understanding, emanates from the owner's cultviral, 

 traditionalistic background ajid his lack of training in modern busi- 

 ness practices. Lack of understanding largely explains his attitude 

 toward insurance business and his notion that payment of premium is 

 merely a costly prepayment of expected losses. 



A self-insurajice plan becomes more and more advantageous the 

 larger the premium required for insurajice protection, but our in- 

 quiry did not disclose extensive use of self -insurance. In fact, 

 no vessel owner in the sample was found to operate a fleet large 

 enough to enable him to self -insure against all insurable risks. 

 A limited and well administered self-insurance plan, however, 

 coupled with excess insurajice placed with private risk carriers 

 deserves the attention of both the vessel owners and the insurance 

 people . 



