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

Related: Shipping losses hit lowest mark in 10 years but newthreats emerge

Large shipping losses have declined by 50% over the past decade,mostly driven by the development of a more robust safetyenvironment by ship owners, according to Allianz GlobalCorporate & 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 shippingincidents (casualties) declined slightly year-on-year by 4% with2,611 reported according to the review, which analyzes reportedshipping losses over 100 gross tons.

Related: Beware of the warranties in Marineinsurance

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

(Click image toenlarge.)

(Photo: Shutterstock)

Technology's upcoming role

However, the maritime sector is entering a period ofconsiderable change and unrest from economic pressures andpolitical factors. Advances in technology now play a heightenedrole in improving safety and performance.

Safety-enhancing technology — fromelectronic navigational tools to shore-based monitoring ofmachinery and crew welfare — has the potential to significantlyreduce the impact of machinery breakdown and human error, whichAGCS analysis shows accounted for approximately 75% of the value ofalmost 15,000 marine liability insurance claims over five yearsequivalent to more than $1.6 billion. (See image on right for more.Click to enlarge.)

Related: Is the insurance industry ready for self-drivingboats?

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, buttechnology offers the potential to reduce human error, as well asreduce machinery breakdown.

Telematics and virtual reality hold potential

Vessel telematics are one way in which human error could bereduced. By analyzing Voyage Data Recorder information, it ispossible to study near misses and feed lessons learned to crewtraining and procedures.

Related: Autonomous tech could revolutionize freighttransport as much as personal travel

Improved communication is another area where developments couldhelp improve safety. Vessels at sea are traditionally veryisolated, but technology could revolutionize ship-to-shorecommunication and support. With improving communications, we couldsee more decision-making moved onshore. It could also give ship'screw access to more onshore expertise and technical support.

Virtual reality technology is becoming more effective and couldbe used to improve safety beyond its current use in navigationaltraining. Virtual reality is the next best thing to hands-ontraining. It is already used in bridge and cargo simulators but itcould be expanded to train engineers, for example on a particularengineering routine.

Related: Virtual reality in insurance: Slow down, you movetoo fast

More integrated and sophisticated navigational systems anddigital charts are another area of development seen in recentyears. However, while positive, these advancements have also raisedquestions about how humans interact with new technology.

(Photo: Shutterstock)

Too much technology?

The issue of overreliance on technology is ongoing and we arestill seeing a number of incidents where officers and crew haverelied too much on technology. Sometimes replacing common sensedecisions with digital inferences is not such a good idea. Crew andofficers have an increased responsibility to understand theshortcomings and limitations of technology. The human interfacewith technology will be an important consideration in futuresafety.

Related: Tech-savvy pirates bring new threats to shippingindustry

The shipping industry forms a critical link in the global supplychain, but the maritime industry is being buffeted by a number ofinterconnected risks at a time of inherent economic challenges. Forinsurers, this will mean changes to the way underwriters assessrisks in the maritime industry.

Insurers base their underwriting on historical data, but we areincreasingly evaluating risk for new types of vessels andtechnology, transiting new routes and using new forms of cargomovements. There will always be new risks to contend with. Our jobin the insurance industry is to anticipate and address these riskswhile developing new practices to best protect our clients.

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