Forecasting Ships’ Prices and Their Influence on Maritime Insurance Market Ghiorghe Bătrînca “Constanta Maritime University”, Constanta, Romania gbatrinca@imc.ro Ana-Maria Burcă “Academy of Economic Studies”, Bucharest, Romania burca.anamaria@yahoo.com Abstract The shipping industry has been growing rapidly from year to year and until not too long ago, shipping was both the greatest beneficiary and hammering pulse of globalization. But now the global economic and financial crisis has stifled the boom of this industry. Since the global economic and financial crisis began in 2009, the problems the shipping industry faces have multiplied, generating a high volatility of prices. With the global expansion of the maritime sector, marine insurance is on the forefront nowadays, more than ever before. As the marine insurance premiums vary according to the value of insured assets and their number, the marine insurance market can be examined through the forecast of ships price in the context of deteriorating economic conditions. Keywords: ships price, marine insurance, ARIMA models, forecasting. Introduction Shipping market has passed through one of its most interesting periods in history between 2003 and 2009. It all started with significant increase in demand for raw materials in China coupled with low level of investment in new ships as a consequence of low productivity during 1990’s. Market participants were surprised to see such a significant increase in freight rates and many of them considered that this freight levels will not be sustainable for longer term. Few of the owners realized that the imbalance between supply and demand is rapidly growing and they ordered new ships at significantly higher prices than those available in the prior to 2003. More and more owners decided to order ships and soon shipyards run out of capacity and during 2007 and early 2008 it was almost impossible to find available space for building new ships before 2012. As a consequence of high freight rates, limited capacity of shipyards and significant increase of steel plates price the prices for ships reached unexpected levels. Market continued on a positive note till second half of 2008 when it was obvious that crisis affecting the banking sector would have a significant impact on demand for shipping services and during six months ships value decreased by more than 50 percent. This was somehow coupled with fears that as from 2010 supply will overpass demand and a long period of low freight level would be expected. Increase of ship prices had also a significant impact on industries supporting maritime industry, like banking and insurance, increasing lenders and insurers exposure to loss of a single asset. This paper will present the use of autoregressive integrated moving average (ARIMA) models for forecasting ships’ prices and will discuss about ships’ prices influence on maritime insurance market.