Coffin ship (insurance)

Coffin ship refers to a type of vessel used during the 19th century, particularly during the period of mass emigration from Europe to North America and Australia. While not a specific insurance term itself, the term's association with high mortality rates among passengers directly impacted the insurance industry. These ships were often overcrowded, poorly maintained, and lacked adequate sanitation and provisions, leading to widespread disease and death amongst passengers.

The deplorable conditions on coffin ships resulted in extremely high rates of mortality amongst the passengers. Insurance companies, therefore, faced significant challenges in assessing risk and setting premiums. The high death toll directly translated to a high payout rate for policies covering the lives of passengers aboard these vessels. This led to several consequences:

• Increased Premiums: Insurance companies, faced with the high risk associated with coffin ships, significantly increased premiums for life insurance policies covering passengers on these voyages. This often made insurance prohibitively expensive for many emigrants.
• Risk Assessment Challenges: The unpredictable nature of mortality rates on coffin ships made risk assessment incredibly difficult for insurers. Accurate actuarial modeling was hampered by the lack of reliable data regarding the conditions on these voyages.
• Refusal to Underwrite: In some cases, insurance companies outright refused to underwrite policies for passengers traveling on ships known to be of poor quality or with a history of high mortality. This left many emigrants without the financial security that insurance could provide.
• Development of Specialized Underwriting: The challenges posed by coffin ships likely contributed to the development of more sophisticated risk assessment techniques within the insurance industry, prompting a more detailed evaluation of the vessel’s condition and voyage details before accepting a policy.

In summary, while "coffin ship" isn't a formal insurance term, the reality of these vessels and the associated high mortality significantly impacted the insurance industry's practices during the 19th century, forcing adaptation in risk assessment, premium setting, and underwriting decisions.