The devastating cyclone and subsequent tidal wave in Burma just over a week ago may have killed 100,000 people and destroyed property and infrastructure, but the cost to insurers is expected to be negligible.

General insurance premiums in the country only total about $US5 million ($5.3 million).

Developing countries in Asia and Africa are a largely untapped market for the insurance industry.

In Asia alone insurers from developed countries like Australia, the US and Europe are now beginning to expand into China, India, Hong Kong, Singapore, Malaysia, Taiwan, Thailand, Vietnam, Indonesia and the Philippines.

The Institute of Actuaries of Australia (IAA) reported last year on the rapidly growing Asian markets, finding general insurance opportunities throughout Asia are relatively undeveloped in comparison to Australia.

Yet premium growth rates have been strong in the less developed Asian markets compared to Australia, which has experienced low growth rates since 2003.

These countries remain poorly regulated when it comes to insurance, and the IAA report shows predictive modelling is rare in Asia and tends to be used mainly by foreign insurers.

Yet it says the trend is slowly changing, with the emergence of regulators in some developing countries encouraging insurers to embrace best practice principles, particularly in corporate governance and risk management.

But the massive devastation caused in Burma and the negligible role played by the insurance industry in the recovery exercise highlights just how far apart the Western world is from the developing countries of Asia.

While the massive influx of food and materials aid into Burma is a normal Western reaction to the Burma situation, few commentators would have paused long enough to consider whether Burma even has an insurance industry.

The Asia-Pacific region still relies heavily on the West for such sophisticated services as insurance, and the people most affected by natural disaster emergencies like Burma’s are probably the least likely to be able to insure against disaster.

The low-lying delta regions of southern Asia are incredibly vulnerable to flooding, with the tsunami of 2004 alone killing 220,000 people in the region.

Insurance Information Institute statistics show the top five of the world’s 10 deadliest catastrophes since 1970 occurred in Asia.

The IAA says with general insurance now very mature in developed countries, insurers face challenges in achieving growth in their home markets – a state of affairs that is luring them into Asian insurance markets where the long-term economic growth prospects and possibilities for insurance penetration are good.

But it adds: “However, there are also significant risks.”

Could the risk-prone areas of Asia even be insured? Risk Management Solutions manager Domenico del Re last week warned insurers about the risk of expanding to developing nations.

“Disasters such as these (Burma) should be taken as a wake-up call to the global insurance industry as companies extend their portfolios outside areas where the understanding of risks and their quantification is well established,” he said.

As the industry faces significant challenges like falling investments and higher weather-related losses in developed countries, the question has to be asked – do developing countries offer new growth opportunities or are many of the risks they would face just too risky?