Asia-Pacific has been more vulnerable to natural catastrophes than any other region in the past 20 years, and underinsurance means governments may no longer be able to act as insurer of last resort, the Asian Development Bank warns.

The region has recorded economic costs of about $US53 billion ($56.37 billion) a year from natural hazards in the past two decades, with Asia accounting for half the estimated global economic cost annually.

“However, last year only 7.6% of those economic losses were insured, so costs are threatening to outstrip governments’ ability to finance recovery,” the bank’s report says.

“Regional co-operation, along with better and more effective national policies to offer disaster risk financing instruments, is therefore critical.”

The report says damage to infrastructure, businesses, farms and homes can push people into poverty, threatening to wipe out gains from economic growth.

Government priorities should include business continuity planning, enhanced technical and institutional capabilities and better co-ordination among public authorities.

The report references Lloyd’s 2012 report on global underinsurance, which notes eight of the world’s 17 most underinsured countries are in Asia.

Commenting on the Asian Development Bank report, Lloyd’s Head of Asia-Pacific Kent Chaplin said: “The level of insurance penetration hasn’t caught up with the level and pace of economic growth. There is a gap that needs to be filled.”

Bangladesh, China, Hong Kong, India, Indonesia, the Philippines, Thailand and Vietnam are the most underinsured markets, according to Lloyd’s. In 2011 China topped the list, with $US79.6 billion ($84.6 billion) of underinsurance against non-life losses. 

Mr Chaplin says urbanisation is piling pressure on booming Asian economies. It puts more assets at risk and means catastrophes have a bigger impact.