About $US1.3 trillion ($1.8 trillion) has been lost following natural disasters over the past 10 years due to underinsurance, Swiss Re’s latest Sigma report says.

Catastrophe modelling predicts losses due to underinsurance will reach $US153 billion ($212.17 billion) a year.

Much of the protection gap is due to global natural catastrophe risk, which has risen steadily over the past 40 years along with property values.

The report says the protection gap has widened even though claim payments have increased significantly, because the value of property at risk has outpaced the purchase of insurance.

The US, Japan and China account for most of these losses, while in emerging markets on average 80-100% of economic losses are uninsured.

Swiss Re Chief Economist Kurt Karl says earthquake risk accounts for most of the gap in the US and Japan, while China’s greatest risk is flooding in major industrial zones.

He says a large number of high-value properties in the US and Japan are uninsured against earthquake risk, despite the relatively high frequency of events.

The report says insurance uptake still lags in many high-growth economies, despite their rapidly growing middle classes.

Risk perception, insurance knowledge, affordability, reliance on post-disaster government relief, trust in insurers and ease of doing business hinder adequate take-up, especially in new markets.

Combined with other “general property risks”, global property underinsurance is $US221 billion ($305.84 billion) annually, the report says.

Swiss Re says closing the gap requires a focus on the uninsured or underinsured, and creation of analytical tools to assess and track evolving risks, from natural disasters to terrorism and cyber.

Insurers require support from external factors such as friendly regulatory environments and government involvement to spread the message.