Southeast Asia’s insufficient insurance protection poses a risk to a growing center for global supply chains, as the area faces severe tropical storms, widespread flooding, and various natural catastrophes.
According to a German reinsurance firm, natural disasters in the Asia-Pacific region caused $73 billion in damages last year, but only $9 billion of that amount was covered by insurance. This places Asia among the most underinsured regions globally for natural disasters. In contrast, 70% of the $133 billion in disaster losses in North America were recovered through insurance.
Asia was home to the second most expensive disaster of the previous year: a 7.7-magnitude earthquake that struck central Myanmar in March. The tremor resulted in $12 billion in damages, with only $1.5 billion insured. It also became the deadliest catastrophe of 2025, claiming 4,500 lives.
Munich Re reports that in many of Asia’s lower-income nations—such as Myanmar, Laos, Cambodia, and the Philippines—insurance coverage can fall below 5%.
Benedikt Signer, executive director of SEADRIF Insurance Company—the first regional catastrophe risk facility in Asia, established in collaboration with the World Bank—notes that insufficient reliable climate data throughout Asia complicates risk assessment for insurers. In regions with limited data, international insurance providers struggle with pricing risk, entering markets, and navigating government relations.
Signer adds that governments occasionally view insurance as squandering public money, since procurement principles typically require tangible goods or services in exchange for payment. However, insurance purchases are intangible, offering no return unless a claim is paid out.
Janice Chen, Munich Re’s head of property treaty underwriting for Southeast Asia, warns that the region’s insurance gap endangers “a critical hub in global supply chains.” She notes that insufficient coverage heightens the danger of economic disruptions spreading internationally.
Southeast Asian economies rely heavily on agriculture and manufacturing, with the region accounting for 30% of global rice production and more than 80% of the world’s palm oil.
Climate-related catastrophes severely affect regional farmers, causing diminished harvests, crop losses, and pest infestations worsened by extreme heat and flooding. These events also disrupt logistics and supply chains by destroying vital infrastructure and postponing cargo shipments.
The absence of insurance leaves vulnerable communities even more devastated by damage to property and infrastructure.
“Without savings for reconstruction and no insurance coverage, you risk losing your home,” Signer explains, highlighting that disaster damages frequently lead to reduced consumption. “When lacking funds to cope, families pull children from school or sell off scarce assets simply to survive the coming days, months, or years.”
Singapore-based SEADRIF provides parametric flood insurance for Southeast Asia. Their distinctive approach enables swift, predetermined payments when particular weather thresholds—such as wind velocity, precipitation amounts, or temperature levels—are reached or surpassed. In August 2023, SEADRIF disbursed $1.5 million to Laos within 24 hours of flooding.
Beyond insurance measures, governments can also build out , while enhancing cooperation with multilateral bodies like the Asian Development Bank and World Bank to lessen climate vulnerability.