International shipping transports approximately 90% of world trade, so the safety of vessels is critical to the global economy. The good news is we continue to see improvements in maritime safety.

Large shipping losses have declined by 50% over the past decade, mostly driven by the development of a more robust safety environment by ship owners, according to Allianz Global Corporate & Specialty SE's (AGCS) fifth annual Safety & Shipping Review 2017.

There were 85 total shipping losses reported in 2016, down 16% compared with a year earlier (101). The number of shipping incidents (casualties) declined slightly year-on-year by 4% with 2,611 reported according to the review, which analyzes reported shipping losses over 100 gross tons.

See the infographic below for a breakdown of total losses in all regions.

(Click image to enlarge.)

(Photo: Shutterstock)

Technology's upcoming role

However, the maritime sector is entering a period of considerable change and unrest from economic pressures and political factors. Advances in technology now play a heightened role in improving safety and performance.

Safety-enhancing technology — from electronic navigational tools to shore-based monitoring of machinery and crew welfare — has the potential to significantly reduce the impact of machinery breakdown and human error, which AGCS analysis shows accounted for approximately 75% of the value of almost 15,000 marine liability insurance claims over five years equivalent to more than $1.6 billion. (See image on right for more. Click to enlarge.)

Technology could bring huge advantages for the maritime sector, catching issues early, before they escalate into a major casualty. Human errorremains the biggest problem for shipping casualties, but technology offers the potential to reduce human error, as well as reduce machinery breakdown.

Telematics and virtual reality hold potential

Vessel telematics are one way in which human error could be reduced. By analyzing Voyage Data Recorder information, it is possible to study near misses and feed lessons learned to crew training and procedures.

Improved communication is another area where developments could help improve safety. Vessels at sea are traditionally very isolated, but technology could revolutionize ship-to-shore communication and support. With improving communications, we could see more decision-making moved onshore. It could also give ship's crew access to more onshore expertise and technical support.

Virtual reality technology is becoming more effective and could be used to improve safety beyond its current use in navigational training. Virtual reality is the next best thing to hands-on training. It is already used in bridge and cargo simulators but it could be expanded to train engineers, for example on a particular engineering routine.

More integrated and sophisticated navigational systems and digital charts are another area of development seen in recent years. However, while positive, these advancements have also raised questions about how humans interact with new technology.

(Photo: Shutterstock)

Too much technology?

The issue of overreliance on technology is ongoing and we are still seeing a number of incidents where officers and crew have relied too much on technology. Sometimes replacing common sense decisions with digital inferences is not such a good idea. Crew and officers have an increased responsibility to understand the shortcomings and limitations of technology. The human interface with technology will be an important consideration in future safety.

The shipping industry forms a critical link in the global supply chain, but the maritime industry is being buffeted by a number of interconnected risks at a time of inherent economic challenges. For insurers, this will mean changes to the way underwriters assess risks in the maritime industry.

Insurers base their underwriting on historical data, but we are increasingly evaluating risk for new types of vessels and technology, transiting new routes and using new forms of cargo movements. There will always be new risks to contend with. Our job in the insurance industry is to anticipate and address these risks while developing new practices to best protect our clients.

Captain Andrew Kinsey is a senior marine risk consultant at Allianz Global Corporate & Specialty. He spent 23 years in the U.S. Merchant Marine and U.S. Naval Reserve, sailing in all licensed ranks. His sailing experience was primarily with Maersk Lines, sailing as Master of three different Container ships. He also served as Master aboard two Military Sealift Command. Kinsey is a graduate of the United States Merchant Marine Academy at Kings Point, N.Y. and holds a bachelor's degree in marine transportation/nautical science. He also holds an Unlimited U.S. Coast Guard Masters License. He can be contacted via LinkedIn.

Special Reports /

Marine insurance: Tech improves safety but overreliance causes concerns

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