The global insurance industry should prepare for an annual average catastrophe loss of $US106 billion ($141 billion) in long-term planning, Verisk modelling firm Air Worldwide says.

The actual average annual loss of the past decade of was around $US75 billion ($99.72 billion), Boston-based Air’s Global Modelled Catastrophe Losses report says.

“This is a stark reminder that we have been fortunate to not have had a major tropical cyclone or earthquake event in a highly populated region. However, such events can and will occur,” President Bill Churney said.

Air says average annual insured losses and the metrics for all regions and perils modelled by AIR have generally increased since 2012, reflecting increases in the number and value of insured properties.

“Losses in excess of $US200 billion ($266 billion) are a very real possibility,” it said. “There’s greater than a 40% chance the insurance industry will experience losses of greater than $US200 billion in the next decade before accounting for growth in property exposure or climate change.”

For the first time, the paper included a section on the Intergovernmental Panel on Climate Change (IPCC) reports, which suggests how the protection gap might evolve in a warmer climate.

AIR's report highlights the large and growing protection gap for many of the perils highlighted by the IPCC report, including coastal and inland flooding.

See the report here.