Natural disasters cost the Australian economy $6.3 billion a year, and the sum is expected to climb to $23 billion by 2050, according to a new report from Munich Re.

The paper, called Expect the Unexpected, says the rate of natural catastrophes in the country has almost quadrupled since 1980 and global warming is projected to intensify their severity.

“Immense insurance and reinsurance capacity, as well as sophisticated risk solutions, are required to deal with these changes.”

Munich Re says climate phenomena such as El Nino and La Nina change hazard and risk levels by altering probabilities for drought or heavy rainfall in eastern Australia.

The number of cyclones with moderate to medium intensity in northeast Australia could fall by 15-35%, while in east-coast cities the number of days with conditions prone to severe thunderstorms and hail could rise by 30% by the end of the century.

The sea level in Sydney and on the east coast could rise 66 centimetres by the 2090s relative to the 1986-2005 average, and the frequency of extreme droughts across the country may increase by a multiple of 1.5.

The predictions are just as dire when it comes to earthquakes.

Major Australian cities are located in regions of “elevated seismicity”, which means a potential for earthquakes of magnitude six and greater in Perth, Adelaide, Melbourne and Sydney.

“With the expected increase in losses from changing exposure and hazard conditions, the need for risk mitigation is urgently rising,” Munich Re says. “Mitigation means taking action now, before the next disasters happen, to reduce the negative human and financial impact.”

However, the Federal Government spends just $50 million annually on pre-disaster prevention and mitigation, which is dwarfed by the more than $500 million it spends on post-disaster relief and recovery.

Munich Re board member responsible for Australasia Ludger Arnoldussen says the insurance industry “needs to focus more on the unexpected”.

“We clearly know that such catastrophes will hit Australia and New Zealand more often and harder, [but what is] unclear is just exactly when and where,” he said.

Munich Re is a member of the Australian Business Roundtable for Disaster Resilience & Safer Communities, along with IAG.

The report is available here.