Daring 1950-5^ overinsurance vas widely practiced in New England 

 and, to a lesser extent, in the Gulf Area and California. Overinsurance 

 is the combined effect of falling earnings which automatically lower the 

 vcJ.ue of a vessel through the capitalization process, the pressure of 

 the insured vessel oimer, the broker's policies, and lack of internal 

 controls between insurer and his representatives. In ajiy case, over- 

 insurance constitutes a serious disregard of sound and basic insurance 

 principles. Available evidence emphasizes the importance of overin- 

 surance as a probable factor which contributed to total losses. 



Also, some imperfections in surveying vessels for both kinds of 

 insurance, especially hull insurance, may have contributed to the 

 insurers' losses. Evidence shows that a few vessels in all areas are 

 not surveyed before they are insured. In the Gulf Area many siirveyors 

 are pressed to make favorable surveys since insurers have the practice 

 of paying for their services only if the vessel is accepted. 



Adjustment of hull insurance claims is a process which frequently 

 brings to a clash the opposing interests of the insurer and the insured. 

 It was found that resistance of the surveyor and the insurance broker 

 to the o'vmer's pressure and their vigilance over inflated shipyard 

 bills are not always present or strong enough to protect the insurer's 

 interest effectively. 



The frequently unreasonable demands of injured seamen, encouraged 

 by lawyers, doctors, and union officials with or -vd-thout litigation 

 may have contributed to higher losses and claim expenses for the 

 insurers . 



B. RECOMMENDATIONS 



Three groups of recommendations follow. Some are addressed to 

 the United States Government, a second group directly concerns the 

 owners of commercial fishing vessels, and a third group consists of 

 suggestions to the insurers for probable improvement of their loss 

 experience . 



1. Recommendations to the United States Government . First, the 

 inverse correlation between gross receipts from fish and shellfish 

 landings and the severity of hull insurgince accidents may suggest that 

 a Government policy aimed at stabilizing earnings at a given level 

 would largely alleviate the hull insurance problem. Apart from con- 

 siderations well kno^m to the Government which make such a policy 

 neither feasible nor expedient, the findings of the survey do not 



