An annual Malaysia Re insurance report on south-east Asia has urged the region to close the natural disaster protection gap, particularly for flood risk.

The ASEAN (Association of Southeast Asian Nations) Insurance Pulse report says more than 90% of total economic losses caused by natural disasters in the 10-member bloc are not covered by insurance.

Floods were responsible for more than 45% of the accumulated total natural disaster losses of more than $US137 billion ($181 billion) since 1990 in nine ASEAN countries.

“Currently, most natural catastrophe risk-management mechanisms in the region rely on ad-hoc government relief, which is not sustainable,” the report said.

“Natural disaster insurance markets in the region are clearly underdeveloped, in particular in personal lines – with the exception of motor insurance.”

The report says flooding in the region is overall considered insurable, citing improved risk management and modelling capabilities.

The report this year focused on natural catastrophes and flooding as the key peril that on average causes the highest devastation in the region.

It says climate change and urbanisation are expected to further aggravate frequency and severity of floods and inundations.

The impact from heavy monsoon rains is often amplified by drainage systems incapable to handle masses of water. The Philippines, Indonesia and Thailand are often hit by severe typhoons, leaving thousands who live in low-lying areas vulnerable to inundation.

“Climate change is impacting peoples’ risk perception,” Malaysia Re President and CEO Zainudin Ishak said. “They realised that weather patterns are different than in the past, sea levels are rising, coastal flooding increases or that the monsoon season seems to have shifted.

“While insurable assets have increased as well, clients seek protection from natural hazards. However, the lower income sections of society remain largely uninsured.”

The findings of the report are based on interviews with executives representing 27 regional and international (re)insurance companies, intermediaries, policymakers and trade associations.

Click here for the report.