Ship structures can fail due to extreme or cyclic loading, corrosion and erosion, so it is necessary to perform structural health monitoring (SHM) on ships to ensure the safety, reliability and integrity of ship structures to avoid major accidents. Displacement reconstruction is one of the main objectives of structural health monitoring. The inverse finite element method (iFEM) is a structural health monitoring method for real-time reconstruction of full-field displacement in plate and shell structures. In the case of shells with large curvature, existing iFEM algorithm will suffer from the warping problem, which affects the fitting accuracy. In this paper, an improved iFEM algorithm is proposed, which does not change the displacement-strain relationship of the element itself. The new algorithm improves the calculation accuracy of the shell element by estblishing tangent plane coordinate system at the element’s Gaussian integration points and improving the element stiffness integration, without increasing the mesh and node quantities. The result of numerical examples shows that the improved inverse shell element can effectively reduce the displacement error after inverse finite element reconstruction.