Premium income from the Asia-Pacific region will double by 2020, contributing an extra €1 trillion ($1.24 trillion), according to a new report by Munich Re.

The slice from “emerging Asia” – markets such as China and India – will be about €670 billion ($830 billion), nearly 70% of the total, it says.

Five of the world’s top 10 primary insurance growth markets will be in the Asia-Pacific region by 2020, with demand driven by increased risk awareness, an expanding middle class and rising consumer savings, according to the report.

But “emerging Asia will continue to be severely underinsured, especially against natural catastrophes”, Munich Re says. 

“With an increase in population, higher value concentration in exposed areas and climate change affecting the weather pattern, the loss potential is increasing. 

“As insurance density is not expected to rise at the same pace, this will leave the region with a growing uninsured disaster-loss bill.” 

About 40% of all natural catastrophes since 1980 have occurred in the Asia-Pacific region, the report says. The region suffered 45% of all economic losses but only 18% of insured losses.

Increased mitigation is needed to offset the risk, according to Ludger Arnoldussen, the Munich Re board member responsible for the Asia-Pacific region.

“Loss mitigation measures are cost-effective instruments for protecting communities on a sustainable basis,” he said.

“Analysing and reducing risk – and offering adequate insurance against it – helps to considerably reduce the human and financial impact of natural disasters.”

Munich Re says the insurance industry must improve risk assessment in the region, taking account of the way fast development creates new peak exposures and hot spots and affects worldwide supply chains, as seen following the recent Thai floods.