2. Factors preventing adequate restriction on coverage . 

 Competition among underwriters seems to have contributed to losses by 

 preventing adequate restriction of the coverage in spite of the insurers' 

 serious efforts to differentiate among risks. 



While alien insurers lowered the hull insurance premium ratio in 

 New England, (table 31 ) they failed to restrict the coverage commensur- 

 ably. It is true that in New England the proportion of policies includ- 

 ing a deductible clause, the franchise amount, and the deductible amount 

 were higher on policies written by alien insurers than they were on 

 policies -ivritten by American insurers. But the proportion of policies 

 with the all-important Inchmaree clause was as high among policies of 

 alien insurers (9^ percent) as among policies of American insurers (9^ 

 percent' . In addition, the proportion of policies of alien insurers 

 with exclusions on loss of eiquipment was only 36 percent, less than 

 half of the 85 percent of American competitors. 



As will be noted in table 31^ in California alien insurers not 

 only offered a lower premiimi ratio than the American competitors but 

 a substantially greater average as well. As n.^Jiy as 96 percent of 

 policies written by alien insurers included the Inchmaree clause, 

 while 9:2 percent of policies written by American insurers included 

 the same provision. Only 55 percent of the policies of the alien 

 insurers included a franchise clause and kh percent a deductible 

 clause, while these percentages were 75 percent and 72 percent, 

 respectively, of policies ^l^ritten by American companies. Although 

 the franchise amount on alien insurers* policies was $2,979 as com- 

 pared to $2,000 on policies written by American insurers, the deduct- 

 ible amount was less ($330) in the former group than in the latter 

 ($360). With regard to exclusions on loss of equipment, both groups 

 included high percentages of policies with such a provision (9^ per- 

 cent for American and SQ percent for alien insurers). 



In addition to a drastic reduction of the premium ratio for 

 protection and indemnity insurance, alien insurers in New England 

 offered a coverage greater than that offered by their American com- 

 petitors (table 32). In return for the higher premium, $220 per 

 creiman as compared to $190 charged by American firms, the deductible 

 amounts on personal injury and property damage were lower than the 

 amounts on policies \7ritten by American insurers. Lower deductible 

 amounts were partially offset by the fact that clause.': on personal 

 injury and property damage was higher on policies ■iJi-itten by alien 

 insurers than on policies vnritten by American insurers. But alien 

 insurers had a larger percentage of policies covering the owner on 

 board than the percentage of policies written by American competitors. 

 Because of the special competitive state of affairs in California, 

 'coverage differentials between the policies of the two competing 

 groups were not too significant. 



136 



