SETTLEMENT FOR ACCIDENTS TO AMERICAN SEAMEN 43

Methods of Underwriting

SOME shipping companies underwrite their own claims and are
known as ‘‘self-insurers.”” Others insure with protective and indemnity
 companies. Some companies are managing operators for
Shipping Board vessels in addition to operating ships of their own.
Claims arising from the operation of the Shipping Board ships,
whether the claim is for property damage, personal injury, cargo
shortage, etc., become the business of the United States Protective
and Indemnity Agency (Inc.). This organization was incorporated
for the purpose of settling all claims arising against vessels owned by
the United States Shipping Board. The premium charged for such
coverage is a flat rate per gross ton of each ship.
The claims arising from the operation of ships owned by the managing
 operator are sometimes only partially covered by their underwriter }
that is, such companies have an agreement with the underwriter
known as a “deductible franchise.” As applied to injury claims
the franchise operates in the following manner. A minimum amount
is specified in the franchise, for instance, $500 and all claims for
amounts under this sum are settled by the shipowner and such claims
do not become the business of the underwriter. For claims in excess
of the stated figure, the excess is paid by the underwriter. The
premium for such coverage is inverse to the amount of the franchise;
that is, the premium for coverage in a $50 deductible franchise
would be somewhat higher than in the example given above. :
A unique method of covering injury claims is employed in one
instance. An insurance company has issued an accident policy to
which is attached what is termed a “Voluntary compensation indorsement.”
 This indorsement obligates the insurance company
to pay injured employees of the insured an award in the amount
that would be payable were the accident legally covered by the New
York State compensation law. The indorsement is shown below.
Voluntary compensation indorsement (New York)

In consideration of the premium provided for in the policy, the company
hereby agrees to voluntarily pay to employees injured in the course of their
employment and covered by said policy, or to their dependents in fatal cases,
such amounts as. would be payable according to the New York workmen’s compensation
 law, including the cost of such medical, surgical, and hospital treatment
as is provided in said law, even though such persons may not have a legal claim
under said compensation law against this employer; provided, however, that
such payment shall be made only on condition that the employee or dependents
shall execute a full legal release of all claims against this employer as may be
required by the company and shall in addition execute an assignment to the
company of any right of action which may exist in behalf of the injured employee
or any person claiming by, through, or under him against any person, firm,
corporation, or estate other than this employer which is or may be legally liable
for such injury. If the company proceeds upon such assignment and recovers
and collects a judgment against the party at fault in excess of the amount of
compensation voluntarily paid and incurred under this policy, the company
shall first take the necessary expenses of the procedure and shall pay any remaining
 balance of such excess so obtained to the person or persons executing the
assignment. The company shall have full power and discretion to proceed
against the party at fault or to settle with such party upon such terms as may
fem Ausiello to the company, either without litigation or during the pendency
ereof.
If the injured employee or any person claiming by, through or under him
shall refuse to accept the voluntary compensation payments offered under the
provisions of the preceding paragraph, then the company shall be permitted at