D. THE PROTECTION AND DIDEMNITY IN3URANCE PROBLEM 



Previous discussions on the accident records, the physical 

 inadequacies of most vessels, the lack of knowledge or disregard 

 of fund mental principles of safety, the poor caliber of crevs, 

 Eind labor recruiting practices in the industry have already 

 thrown some light on the problem of protection and indemnity 

 insurance. Yet, only the symptoms of the unprofitable loss 

 experience of insurers have been examined. ITliat lies behind 

 the physical and human circumstances which surrounded each 

 accident? How have these forces adversely affected the insvir- 

 ability of commercial fishing vessels? 



If remedies are to be found which go beyond the cure of 

 symptoms, the protection and indemnity insurance problem requires 

 further scrutiny. The owner's liability for accidents of crews 

 and the role of labor sire discussed here, while the role of the 

 middleman who takes part in the adjustment and settlement of 

 claims will be discussed in the final chapter of this report. 



1. Receipts from fish landings and claim losses for 

 protection and indemnity insurance . I'he direct association 

 between receipts and claim losses has already been shown in 

 table 25. Although this association is likely to be largely 

 spurious, a few observations on the subject are worth considering. 



To some extent, the direct association may be due to fishing 

 operations requiring greater exposure of crews to risks involved 

 in longer or more frequent trips for larger receipts, assuming 

 fairly stable prices. The above reasoning is subject to numerous 

 quellfications, but may explain the experience in California more 

 than in New England. On the other hand, it may be possible to 

 find a stronger argument for an inverse association between 

 receipts and losses in the manner in which most fishermen are 

 compensated for their labor. Since a kO-60 lay or other similar 

 method of sharing largely determines their compensation, wages 

 depend partly on some operational costs but mostly on receipts 

 from fish landings. On this basis, it would be more logical for 

 a fall in receipts to be associated with a rise in claim losses 

 inasmuch as fishermen might try to compensate losses in wages 

 with larger insurance benefits. Then why is the association 

 direct? One plausible explanation is that claim losses for 

 protection and indemnity insurance are directly affected by 

 receipts from fish landings over periods longer than a year, 

 perhaps as long as the whole five-year period under study. This 

 argument is consistent with the fact that evidently no problem 

 existed prior to 1950 in spite of favorable developments in 

 Jurisprudence. Another explanation may be that falling receipts 

 have adversely affected the insurability of vessels in an indirect 

 manner by unfavorably influencing labor relations. Both explanations 



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