The previous remai'ks of the owners seem to indicate that payment 

 of insurance premiums is largely considered a mere prepayment of 

 losses to be sustained. Furthermore, noninsurance is considered 

 identical to self -insurance. But noninsursince does not mean self- 

 Insuraxice, unless the owner sets up a reserve to meet losses from 

 risks which could have been covered had he carried insurance with 

 a risk carrier. Neither is a depreciation reserve a self -insurance 

 plan, unless it provides for meeting damages to vessels beyond the 

 normal, wear and tear of machinery, equipment, and replacement of 

 old scrapped vessels. Nor is a fund to meet medical expenses of 

 injured crewmen sufficient to cover the o-vmer's unlimited liability 

 from civil suit. Since no single fleet operator is large enough to 

 maintain a true self- insurance plan to cover all his insurable risks, 

 a limited self -insurance plan could be combined with excess hull and 

 protection and indemnity insurance with an independent risk carrier. 



Insurance practices . ''/Thether owners would be able to find a 

 market to buy excess insurance without having to buy primary insurance 

 at the same time is a different matter. As far as we were able to 

 ascertain, in the past, risk carriers have written excess insuraoice 

 only when accompanied by primary insurance. The subject of ins\irance 

 practices and their importance to the insurance problem will be 

 discussed in detail in Chapter VI. Here, a few practices of under- 

 writing vessels will be mentioned which were found to be related 

 directly to the decision to insure or not to insure. 



Besides high premiums and deductibles, other insurance terms in 

 and of themselves seem to have contributed to noninsurance. Accord- 

 ing to one New England vessel owner, "Hull insurance rates were 

 raised from 11 percent to 15 percent" and "I could not get protection 

 and indemnity insurance unless hull insurance was purchased too." 

 Understandably, the high hull insurance rate reflects the poor quality 

 of the risk in question. The condition of no protection and indemnity 

 insurance without hull insurance is an additional tag on the price 

 for insurance protection amounting almost to an outright refusal. 

 Tie-in contracts may be justifiable in soma instances because of the 

 quality of the risk involved. However, unless circumstances like the 

 above justify it, this condition as a general policy, reportedly 

 being followed by some insurers, seems to limit the opportunity of 

 owners to insure their vessels for hull without at the same time 

 insuring it for protection and indemnity. 



39 



