In spite of the above effects of competition, many insurers as a 

 group made serious _fforts to restrict the key provisions of the con- 

 tract vhich largely determined the magnitude of their losses. In New 

 England the full coverage of the important Inclimaree clause vas 

 restricted. During the policy year 1950-51 as much as 'J1.8 percent 

 of the policies studied provided for full coverage under the clause. 

 In 195^-55 only 26. k percent of the policies included the same pro- 

 vision (table A-28, New Englaxid in Appendix A). At the same time, in 

 1953 and thereafter, all franchise sjid deductible amounts rose substan- 

 tially. In the Gulf Area ajid California only the franchise and the 

 deductible amounts increased, while the poverage under the Inchmaree 

 clause increased in the former area and remained the same in the latter 

 (table A-28, Gulf Area and California in Appendix A). 



Similarly, the key coverage provisions for protection and indemnity 

 insurance were restricted considerably. In New England the proportion 

 of policies providing for a deductible on personal injuries increased 

 from about 25 percent in 1950-51 to 70. 3 percent in 195^-55, but the 

 deductible average was slightly reduced (table A-32, New England in 

 Appendix A) . V/hile all policies in California provided for a deductible 

 on personal injuries throughout the period, there was a slight increase 

 of the deductible amotmt. 



Vfliether the above restriction of the key coverage provisions were 

 adequate is largely a matter of vie-vrpoint and objective. Since the p\ir- 

 pose of this report is to analyze the insurance problem after the fact 

 and in the light of the largely unprofitable loss experience of insurers 

 in order to draw conclusions useful to all concerned, the adequacy of 

 these restrictions may be questioned. 



Neither the restriction of hull insurance coverage under the Inch- 

 meiree clause nor the rise in the deductible amount were adequate to cone 

 with the rising tide in the partial losses in New England. The decline 

 in the proportion of policies with full coverage under the Inchmaree 

 clause was offset by a proportional increase of policies with an Inchmaree 

 clause which excluded negligence with respect to machinery, so that during 

 1950-5^ the percentage of policies with the Inchmaree clause in general 

 increased from88.1 percent to 97.8 percent (table A-28, New England in 

 Appendix A). A measure of the inadequate restriction of hull insurance 

 coverage is given by the loss record in New England. As much as h^ per- 

 cent of claims were of $500 or less, while partial losses represented as 

 much as 61 percent of all losses (cf . discussion of tables 13 and ik in 

 Chapter IV). By the same measure, failure to restrict coverage under 

 the Inchmaree clause in the Gulf Area and inadequate rise in the deduct- 

 ible amount may partly explain the fact that almost 50 percent of losses 

 were $500 or less, while partial losses represented as much as 50 percent 

 of all losses. Finally, although partial losses constituted only 29 per- 

 cent of all losses in California, the frequency and severity of losses 

 because of mechanical failure (56 percent) Justified some restriction of 

 the full coverage under the Inchmai'ee clause in all policies in that area. 



137 



