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The lack of insurance coverage in Southeast Asia threatens an even more important hub for supply chains, as the region is plagued by tropical storms, major floods, and other natural disasters.
Total losses from natural disasters across Asia-Pacific last year totaled $73 billion, but only $9 billion was insured, according to a German reinsurance company. Munich Re. That makes Asia one of the least insured regions in the world against natural disasters. (By comparison, 70% of North America’s catastrophe losses of $133 billion were recovered.)
The second costliest disaster last year was in Asia: The March 7.7-magnitude earthquake in central Myanmar. The earthquake totaled $12 billion in losses, of which only $1.5 billion was insured. It was also the deadliest disaster in 2025, with 4,500 deaths.
Insurance coverage may be less than 5% in most low-income countries in Asia, such as Myanmar, Laos, Cambodia and the Philippines, according to Munich Re.
The lack of reliable climate data across Asia makes it difficult for insurers to accurately assess risk, explained Benedikt Signer, executive director of SEADRIF Insurance Company, the first regional catastrophe risk facility in Asia, developed with the World Bank. In data-poor environments, international insurers do not know how to price risk, enter the insurance market, or “deal with the government.”
Governments also sometimes see insurance as a “waste of public funds, because from the perspective of public procurement, if you buy something you should have a good or service in return,” Signer said. “But with insurance, what you buy is intangible, and you don’t get anything unless there’s a payment.”
The lack of insurance coverage in Southeast Asia threatens “an important hub of global supply chains,” said Janice Chen, Munich Re’s head of property treaty underwriting in Southeast Asia. “Inadequate insurance coverage increases the risk of economic shocks spilling over borders.”
Agriculture and manufacturing dominate the economies of Southeast Asia, with the region producing 30% of the world’s rice, and more than 80% of palm oil.
Climate disasters have had a significant impact on farmers in the region, resulting in reduced yields, crop failures, and increased pest infestations due to extreme heat and floods. They also affected logistics and supply chains in the region, damaging critical infrastructure and causing delays in the delivery of goods.
Without insurance, vulnerable populations can be hit harder by the loss of property and infrastructure.
“If you don’t have the savings to rebuild and it’s not insured, you can lose your home,” Signer explained, pointing out that catastrophic losses also often result in loss of consumption. “If you don’t have money to answer, you take the kids out of schools, or sell the limited assets you have just to make it through the next three days, months or years.”
SEADRIF, based in Singapore, offers a parametric insurance policy that takes care of flood risks in Southeast Asia. Their unique model offers fast, predetermined payouts when certain weather thresholds—including wind speed, precipitation levels or temperature—are met or exceeded. SEADRIF was able to provide $1.5 million in insurance payments to Laos just one day after the August 2023 floods.
Besides insurance, to reduce climate vulnerability, governments can also build physical defenses such as seawalls and flood barrierswhile deepening cooperation with multilateral organizations such as the Asian Development Bank and the World Bank.
This story was originally featured on Fortune.com
