management- labor relations, or lack of fear toward loss from civil 

 suit related to local conditions in the vessel's home port (usually 

 the port of fishing operations); and high insurance rates together 

 ■with tie-in condition of no protection and indemnity insurance 

 without hull insurance or determination of premium on basis other 

 than on crew size (latter condition is practiced only in California). 



The above variables describe the typical or most frequent 

 characteristics of insured or noninsured vessels. As ideal types 

 they lack the numerous qualifications which are discussed in the 

 text of the chapter. 



3. Concluding remarks on the importance of noninsurance . 



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

 of operating a commercial fishing vessel is 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 (maiiagerial salaries, depreciation and borrowed 

 capital) not properly estimated may lead to a false sense of pros- 

 perity. This situation may prolong the erJ.stence of inefficient 

 fishing pleints (vessels) and overcapacity in the industry to the 

 disadvantage of all fishing operators. Contrastingly, if the saved 

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

 noninsured o^vner with the maximum severity while the adjustment 

 process of the industry's overcapacity to the demand for its products 

 is carried out in the most disadvantageous way for the economy. 



The sLim and substajice of the occurrence of noninsurance seems 

 to revolve around two pivotal points quite prevalent among small 

 vessel o\meTB. One is the realization that the premium for insur- 

 ance protection is a postponable semifixed cost of fishing opera- 

 tions. The other is the lack of understanding of the meaning of 

 insurajice 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 submarginaJ. and 

 to the general economic conditions and basic structure of the fish- 

 ing industry. The second pivotal point, namely lack of imderstand- 

 ing, emanates from the owner's cultural, traditional! stic background 

 and his lack of training in modern business practices. Ignorsuice 

 largely explains his attitude toward insurance business and his 

 notion that payment of premivmi is merely a costly prepayment of 

 expected losses. 



kk 



