overinsurance, low earnings of vessel, poor housekeeping, mortgage 

 rather high, and unpaid bills. Many vessels seem to have been 

 lost under circumstances which smack of the presence of moral 

 hazard. At the time of the accident the crew is smaller than 

 normal and usually consists of relatives, not outsiders; in two- 

 thirds of the cases of total loss of the vessel, another vessel 

 is nearby to take care of the crew and weather during the time 

 the accident occurred is smooth." Although his experience was 

 limited to one New England port, his story illustrates the prob- 

 able presence of moral hazard. 



All in all, the information on hand suggests that during 

 1950-5^ moral hazard had adversely affected the insurability of 

 commercial fishing vessels. V/ithin each area, loss experience 

 from moral hazard differs greatly from port to port; yet, none 

 of the responding insurers in all three geogrB,phical areas 

 questioned the probable presence of moral hazard. By comparison, 

 the adverse effect of moral hazard on the insurability of vessels 

 seems to have been worse in New England than in the Gulf Area and 

 California. 



3. Vessel population turnover . Further evidence of the 

 insurability of commercial fishing vessels is presented in 

 table 26. Vessel turnover in the population of each area 

 during 1950-5^ was estimated by "blowing up" the number and 

 average tonnage of newly built and lost vessels which were 

 included in the sample. Differences between estimated and 

 actual figures are not likely to be significant for two addi- 

 tional reasons besides the representativeness of the samples. 

 First, the sample represents a relatively large portion of the 

 vessels in the ports of each area--about 31 percent in New England, 

 11 percent in the Gulf Area, and 21 percent in California (computed 

 from table A-1 in Appendix A) . Second, the actual en\jmeration of 

 all commercial fishing vessels which were lost during the five-year 

 period differs only a little from the estimated figures — 89 vessels 

 actually lost compared to 93 estimated losses in New England, I78 

 against the same figure in the Gulf Area, and 158 to 157 in 

 California (actual losses in table A-65 Appendix A and estimated 

 losses in table 26). 



It will be seen that during 1950-5^, New England's vessel 

 population declined by 36 vessels, amounting to a total of 873 

 gross and 36O net tons. In contrast, the vessel population in 

 the Gulf Area increased by 206 vessels totaling 15,902 gross 

 tons and 9,206 net tons. The vessel population in California 

 declined by 5 vessels but since newly built vessels were larger 

 than lost vessels, tonnage increased by 10,l68 gross tons and 

 5,155 net tons. Most likely, the actual decline of the New 

 England vessel population was greater than the estimated figures 



103 



