Hmmm - it is hard for me to tell if that is limited to gelcoat damage or really into the fiberglass substrate. If just gelcoat - ignore it. If it is into the substrate I would:
- Grind the gelcoat off all the way around
- Fair the sharp 'steps' with vinyl ester fairing compound
- Using VE resin (or epoxy if you are painting afterward) put 3-4 layers of 1" wide 9oz tape all the way around. Each layer should be about 0.01" thick.
- Fair it again.
- Gelcoat if VE or paint if epoxy.
Don't buy materials yet - Someone else may have a better idea...