Ships do not regenerate health automatically. You must build a Repair Crane on your island's coast. When a ship docks near a warehouse with a crane, it slowly repairs. Upgrade the crane to repair faster.
Every game begins in the Occident. Your goal here is to establish a robust supply chain to support your population’s ascension through civilization tiers. Anno 1404 Venice Guide
In Venice, you can manipulate the politics of the AI opponents without firing a single shot. Ships do not regenerate health automatically