The above developments may have contributed not only to higher 

 labor costs in the industry, but also increased the bargaining power 

 of organized fishermen euid changed their attitudes. The following 

 remarks of a leading vessel owner in New England are a car.e in point: 

 "But the biggest trouble is the union demands. Every year, they 

 come do'J'm for more; there is no question as to whu-ther it is 

 Justified or available. . .and when I say, 'You are driving us out 

 of business,* they just shrug their shoulders and say, 'If you 

 go out of business, we'll go to work in a defense plant.'" Poor 

 recruitment practices and high crew turnovers are additional 

 factors which explain the low caliber of crews on many vessels. 



B. VESSELS AND THE SELECTION OF INSURABLE RISKS 



Insurance tends to increase hazard. Evidence is presented here 

 which shows that this generally accepted proposition is valid. 



1. Statistical techniques . In order to test the above 

 proposition, a number of techniques were employed which require 

 explanation. 



First, it was necessary to rate all insured vessels on the 

 basis of their loss experience record as recorded in claims files 

 of insurance companies. This involved several computational steps 

 for vessels insured for hull. The average amoxint of paid loss per 

 policy year was computed by dividing all paid losses of each 

 vessel by the number of policy years for which each vessel was 

 insured. The resulting figure represented the average loss per 

 policy and was used as an index for classifying all vessels. 

 Since material of hull ajid total losses are important variables 

 in hull insurance, active steel and lost wood vessels were 

 separated from active wood vessels. Half of the latter group, 

 having no reported losses or having the smallest losses (less 

 than the median) per policy year, were designated as vessels -vriLth 

 the best record; the other half, with the largest losses (more 

 than the median) per policy year, made up the group of active 

 wood vessels with the worst record. The some procedure was 

 followed for vessels carrying protection and indemnity instironce, 

 with only one difference. Active steel and lost wood vessels 

 were not classified separately. 



The fourfold rating of vessels carrying hull insurance and 

 the twofold rating of protection and indemnity insurance appear 

 in table l8. Average paid loss per policy year for each class 

 in column 1 of the table shows that the loss experience of 

 worst active wood vessels for hull insursjice was much greater 



87 



