Due to the shipping industry's international legal framework, there are loopholes in the system, which can increase the risk of incidents with high economic costs due to the substandard operation of vessels. This article uses duration analysis and through the creation of ship life cycles provides insight into the effectiveness of inspections on prolonging ship lives. The analysis accounts for fluctuations in the relevant economic environment and the (possibly time-varying) ship particulars. It is based on a unique dataset containing information on the timing of accidents, inspections and ship particular changes of more than 50,000 vessels over a 29-year time period (1978–2007). The results reveal that the shipping industry is a relatively safe industry but there is a possible over-inspection of vessels. The effect of inspections varies across ship types and the prevention of incidents with high economic costs can be improved by a coordinated approach of all types of inspections that are performed which allows the decrease of unnecessary inspections. Further, more emphasis should be placed on the rectification and follow-up of deficiencies and the implementation of the ISM code. Another added benefit for the industry would be to improve transparency related to class withdrawals and class transfers for all classification societies. Another interesting finding is that for the majority of ship types, an increase in earnings decreases the incident rate. This is in contrast to the industry perception of the impact of earnings.