Lloyd’s, the Monetary Authority of Singapore and the British Government have signed a statement of intent to “support and nurture” insurance markets in the region and tackle underinsurance.

Asia is the world’s most natural catastrophe-prone region, yet on average less than 5% of likely economic losses are insured, compared with 40% in developed countries.

The statement says in the past 20 years Asia has accounted for almost half the world’s estimated economic losses from natural disasters – about $US53 billion ($72 billion).

“This means one major catastrophe could wipe out decades of economic progress,” Lloyd’s says.

The signatories have resolved to share knowledge and expertise with partners across the region to identify threats facing economies and support development of new risk-transfer solutions.

Lloyd’s Chairman John Nelson calls Singapore “Asia’s pre-eminent insurance hub”, with four of the world’s top five brokers and 16 of the top 25 reinsurers locating regional headquarters there.

The London market has been in Singapore since 2000 and employs 400 staff. It provides cover to 70% of Straits Times Index companies.

“Lloyd’s has developed its largest concentration of underwriting and risk management expertise outside of London here in Singapore, and we want to use that to support the development of insurance markets across Asia,” Mr Nelson said.

The statement of intent notes underinsurance is a serious problem in the region. Last year Asia’s insurance penetration rate was just 3.1%.

Monetary Authority of Singapore MD Ravi Menon says the group will partner with insurers to develop effective insurance solutions and facilitate cross-border access to specialist insurance services, “to strengthen Asia’s resilience to large natural catastrophes”.

The signatories have urged businesses in Asia’s insurance industry to join their commitment.