safety and seaworthiness

1. The possibility of insuring cargo was introduced earlier. How does the situation change, as far as incentives are concerned, when companies can insure their transported goods against possible shipwrecks?




First of all, the companies’ most important aim is to safe money. Therefore if they have to deliver their goods from on place to another, they are intent on taking care about their products. Transportation companies comprehend that it is by no means more efficient to teach their staff to carry out good safety on board than leaving the ship in own responsibility and hoping that craft and cargo will arrive without a damage. In no doubt it is quite expensive to hold a good quality of security and seaworthiness. Preparing the stuff, checking the ship and everything cost time and money. The whole situation changes if the company has now the option of insuring the cargo against potential ship wrecks.
The term moral hazard, originated in the insurance industry comes to light. I...