Large shipping losses have declined by 38 per cent globally over the past decade, with the downward trend continuing last year, according to Allianz Global Corporate and Specialty's (AGCS) Safety and Shipping Review 2018.
A total of 94 losses were reported last year from around the shipping world, down 4 per cent year-on-year. Last year's losses were the second lowest in 10 years after 2014, the report noted.
Bad weather contributed to the loss of more than 20 vessels, according to the annual review, which analyses reported shipping losses over 100 gross tons.
"Globally, the decline in frequency and severity of total losses over the past year continues the positive trend of the past decade. Insurance claims have been relatively benign, reflecting improved ship design and the positive effects of risk management policy and safety regulation over time," said Mr Baptiste Ossena, global product leader hull and marine liabilities for AGCS.
AGCS is the corporate insurance arm of German-based Allianz, one the world's largest financial services companies.
Yet, incidents in the South China, Indochina, Indonesia and Philippine maritime region rose by 25 per cent in the past year, and it remains the No. 1 area worldwide for major shipping incidents for the past decade.
Last year, almost a third of losses globally occurred in this region, mainly in Vietnamese waters.
The major loss factors include weather - Typhoon Hato and Typhoon Damrey caused more than six losses.
The East Mediterranean and Black Sea region is the second major loss hot spot, followed by the British Isles.
There was also a 29 per cent annual increase in reported shipping incidents in Arctic Circle waters, according to AGCS analysis.
Nature aside, man-made tensions around major shipping routes in Asia were also to blame.
The South China Sea is a key transit route for East-West trade from China, South Korea and Japan and accounts for one-third of global shipping trade.
It is also the centre of territorial disputes between several countries within the region.
This has resulted in an increasing military presence in the South China Sea, with the United States and China conducting naval exercises. Last year saw two major collisions between US naval ships and commercial vessels.
"The territorial claims and disputes may have larger implications long term and threaten the very freedom of the seas and navigation in South-east Asia, with far-reaching implications for trade with Asia," said AGCS senior marine risk consultant Andrew Kinsley.
"A growing concentration of trade and political tensions makes for a volatile situation in the region that could create safety issues."
While piracy has hit record lows globally, it remains a threat in regional waters, accounting for three-quarters of all piracy incidents around the globe.
South-east Asia had 76 piracy incidents last year, up 11 per cent from 2016. Indonesia continues to be the global hot spot with 43 attacks.
Meanwhile, the number of attacks in the Philippines more than doubled to 22 from 10 in 2016, according to the International Maritime Bureau.