Noninsurance reduces the number of risks to be insured and 

 therefore limits the operation of the law of averages. Moreover, 

 apart from the ^ridely accepted belief that insurance by itself has 

 the tendency to increase the hazard, there are a few indications 

 that the majority of noninsured vessels, especially in the Gulf Area, 

 may be better risks than the currently insured vessels. To the 

 extent that this may be true, a plan inducing noninsured owners to 

 carry insurance on their vessels may finally lower the cost of in- 

 surance protection for all. Although theoretically correct, this 

 observation is subject to various qualifications. 



2. The cost of insurance . In terms of gross premium, protection 

 against hull insurance accidents rose during the years 19'70-5^ from 

 $2,225 to $2,820 per policy in New England; from $1,008 to $l,2l8 in 

 the Gulf Area; and averaged from $6,2^2 during the first two years, 

 1950-51, to $6,^32 in the last three years, 1952-5^^, in California. 



In terms of coverage, the rise of insurance cost was equally, if not 

 more, important than the rise in gross premium. 



Comparison of insurance cost between areas disclosed that the 

 rise in cost was greater in New England and less pronounced in the 

 Gulf Area and California. But in terms of premium per hundred dollars 

 of insurance the average hull insurance cost during the five-year 

 period was higher in California than in the other areas, with the 

 Gulf Area probably occupying the second position, followed closely 

 by New England. 



During 1950-54 the average gross premium per policy for protec- 

 tion and indemnity increased from $1,425 to .^2, 5^3 in New England, 

 from $436 to $485 in the Gulf Area, and from $378 to $71? in California. 

 In absolute tenns, protection and indemnity insurance is costlier in 

 New England than elsewhere. 



Finally, the cost of insurance in terms of gross premium and 

 coverage may not always measure fully the financial burden which falls 

 upon the owner of a commercial fishing vessel. Interest charges and 

 other costs incidental to the carrying of insurance may make the cost 

 of insurance more burdensome. Furtherjnore, the cost of insurance is 

 mostly felt when other operational costs are also rising and i-eceipts 

 from fish ajid shellfish landings are falling. 



3. Loss experience of insurers . According to our best estimates, 

 during the period 1950-54 the paid losses and adjustment expenses for 

 hull insurance averaged from 71 to 76 percent of earned premiums in 

 New England, 74 to 79 percent in the Gulf Area, and 49 to 54 percent 

 in California. This means that, on the average, insurers in the first 

 two areas paid more in losses and adjustment expenses than the amount 

 of their earned premium available for that purpose. In contrast. 



