ECONOMY

Soaring cost of ship insurance

The cost of insuring merchant vessels has risen twenty-fold, according to data compiled by insurance brokers Marsh & McLennan, due to the high number of piracies in the first quarter of 2009. Representatives of the international firm suggested recently that there were ships that were insured by up to 0.1 percent of their value in order to pass through the Gulf of Aden. Interestingly, the bigger and faster ships are cheaper to insure because they can avoid pirates more easily. Meanwhile most small shipping companies with up to two vessels have found themselves in a financial storm as they struggle to meet their obligations. These firms, which account for 40 percent of all Greek shipping companies, have overborrowed and the value of their ships has declined considerably. This creates a big opportunity for larger companies to consider buyouts. Some lenders have even resorted to court action, which may result in the arrest of vessels.