The most dangerous shipping channel in the world is through the Gulf of Aden in Somalia.  The problem is piracy and it’s widespread.  To counteract the problem international shipping insurer company Jardine Lloyd Thompson is financing a navy to aid in ships’ safe passage.

According to an article posted on Business Insider, the Convoy Escort Program (CEP) hopes to have a fleet of 18 ships by December.   The cost is estimated at $70 million dollars.  They are purchasing seven 150-foot fast patrol boats that were formerly a part of the Swedish Navy.  They have also located eleven offshore supply vessels for purchase and conversion.

The plan is to provide escorted passage to ships traveling between the Red and Arabian Seas.

Here’s what they have to look forward to according to the International Chamber of Commerce.  
“Pirates fire automatic weapons and Rocket Propelled Grenades (RPG) at merchant vessels in an attempt to board and hijack them. Once the attack is successful and the vessel hijacked, they sail the vessel towards the Somali coast and thereafter demand a ransom for the release of the vessel and crew," the organization wrote.

So why is an insurance company reaching into their pockets and paying for this?  It is estimated that the pirates are costing the global economy $7 billion a year.  So insurance companies are losing a lot of money.

Ship owners are paying a premium of $50,000 to $80,000 per trip through the channel.  The merchant ship owners will be asked to pay between $30,000 and $40,000 per ship per trip to acquire the escorted passage.