Aether a claim is covered by the provisions of the insurance 

 contract or not is largely a matter of the circumstances as reported 

 by the captain, the crew, or the vessel owner, on the one hand, and 

 of the surveyor's or adjuster's and broker's judgment, on the other 

 hand. Therefore, the insurer's loss record partially depends on the 

 loyalty of these insurance representatives. Sometimes they can 

 benefit the insurer and sometimes they can ruin him. An underwriter 

 from California who sustained heavy losses remarked: "Competition 

 has been keen and the chief goal of the agent is profit-making through 

 commissions. There is little loyalty to the underwriter on the part 

 of the agent." There is no doubt that a great deal of the insurer's 

 interests hinge on the loyalty of his field representatives for both 

 kinds of insurance, but especially for hull insurance. 



Adjustment of hull insurance claims is a process wtiich frequently 

 brings to a clash the opposing interests of the insurer and the insured. 

 Comments from o\mers and intervievrers alike testify to the importance 

 of the broker and the surveyor in settling claims. Here is an illus- 

 trative case from New England as an interviewer reports it: "The 

 vessel owner has no use for insurance companies and brokers. Lost a 

 mast and dragging gear. Agent told him it was covered. He bought a 

 mast and He was told that he was not covered. Cnmer was very incensed 

 at both broker and company... I tallied with insurasnce company people. 

 The surveyor claims that the mast was rotted, and the shipyard padded 

 the bill." Resistance against the owner's pressure and vigilance over 

 inflated shipyard bills were not always present or strong enough to 

 protect the insxirer's interest effectively. One New England owner 

 commented: "Rates are too high because of exorbitant charges made 

 by all the boatyards and phony claims"; and a vessel owner from the 

 Gulf suggested: "The insurance agent should inspect the work done 

 by shipping yards as they inflate the bills when they know that the 

 boat carries insuraince." 



The difference between amount claimed and the amount paid for 

 hull insurance claims offers a measxire of the attempt made by insiirance 

 people to curtail the insurer's losses. In New England about 85 percent 

 of the claimed amounts were actually paid, in the Gulf Area 91 percent, 

 and in California 90 percent. Claim expenses were relatively small, 

 ranging between 5.3 percent and 3.7 percent, which may indicate that 

 some expenses related to the settlement of claims may be allocated to 

 operational costs (table A-IO8 in Appendix A). Also, disputes over 

 claims may partly explain the rather lengthy waiting period required 

 for their settlement. For American insurers the average waiting 

 period was h months in New England, 2 . 5 months in the Gulf Area, and 

 6.3 months in California; for alien insurers, wherever available, the 

 period was lengthier- -4. 7 months in New England and less- -5. 3 months 

 in California (table A-IO9 in Appendix A). 



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