Emerging economies often have substantial capital bases but are hit particularly hard by natural disasters because they lack the resources and expertise to protect their assets, according to Munich Re.

They benefit most from insurance because they are excessively affected when catastrophes strike, it says.

Direct losses average 2.9% of annual GDP in emerging economies, while the figure is 0.8% in industrialised nations and 1.3% in developing countries, the reinsurer says.

Direct losses from the 2011 Thai floods were 12% of GDP, while the 2010 earthquake in Chile cost 14%.

A Munich Re study with the University of Wurzburg finds insurance minimises losses because it provides encouragement to reduce risk, and if an event occurs losses are limited because insurance supports reconstruction.

Ludger Arnoldussen, the Munich Re board member responsible for Asia-Pacific, says the study confirms the importance of a strong insurance sector.

“Insurance can minimise consequential losses from natural catastrophes, supporting a quicker and more comprehensive return to a normal economic and social situation.”