Wildfire losses are increasing and the “fire continent” of Australia could be hit hard, Lloyd’s warns.

Insurers across several lines of business must be mindful of their exposures and roles in mitigation, it says in a new report.

US wildfires alone cost the insurance market $US595 million ($638 million) last year, but insurers can expect losses to rise due to increasing global temperatures and populations.

South-central Australia, western South America, the western US, south-west Canada, parts of the Mediterranean basin and many of the drier regions of Africa and Asia are among regions most prone to increased risk.

In Australia, wildfires have accounted for 10% of insured losses from all natural disasters, with average annual insured losses estimated at $120 million.

Victoria’s Ash Wednesday bushfires in February 1983 were the costliest for the industry. Years of drought resulted in more than 180 fires blown by winds of up to 110 kmh that amounted to $1.3 billion in insured losses.

Australia is sixth in a table of the worst hit nations, having suffered $US2.6 billion ($2.79 billion) of economic damages since 1900. The US tops the table, with $US17.8 billion ($19.1 billion).

Lloyd’s says that wildfires globally have caused $US52.3 billion ($56.1 billion) of economic losses since 1984.

Property is the most exposed line, but the fires also pose a threat to liability insurers, with wildfire being one of the few natural perils that can be triggered by human activities such as poorly maintained power lines.

Business interruption may occur and motor can also be affected. There may be repercussions for health insurance from secondary problems caused by smoke, smog, burns or water contamination.

Insurers can play a role reducing risk, the report says.

“One of the things insurers can consider doing is to engage directly with legislators as well as communities and individuals,” Lloyd’s Emerging Risks and Research Executive Sandra Gonzalez said.

“Some governments have been considering introducing zoning regulations that will limit building in wildfire-prone areas. The insurance industry could work with governments to help facilitate that kind of legislation being passed.”

Insurers should also offer guidance to customers, Lloyd’s says.