Insurance firms have been told to offer cheaper premiums to companies that are preparing for the impacts of climate change amid a growing frequency in extreme weather events.
In a report published today, reinsurance broker AON said there are not enough incentives that encourage businesses to prepare for events like hurricanes and wildfires.
It reveals that 40% of the $225bn (£174bn) in economic losses caused by natural catastrophes last year was covered by insurance, the highest year for insured loss coverage since 2005.
Aon's economic loss calculation is considerably higher than Munich Re's previous estimate of $160bn, and would make 2017 and 2018 the costliest two-year period on record.
"The role of insurance in helping finance and reward corporate efforts needs much deeper investigation," Aon said. "Either through premium discounts or access to additional capital."
Despite the lack on incentives, private sector and government-sponsored insurance programmes covered $90bn of total economic losses last year - the fourth-highest total on record.
Aon said reinsurance companies currently have enough capital to cope with the insurance protection gap, but that costs would keep rising without more effort to reduce risk.
The firm warned that infrastructure remains "substantially underinsured", and that cooperation between policymakers, risk managers, engineers, investors and insurers is needed.
There were a total of 394 natural catastrophes last year, including hurricanes Michael and Florence in the US, and Typhoon Mangkhut in the Philippines, Hong Kong and China.
Weather events are estimated to have cost $653bn over 2017 and 2018, with insured losses totalling $237bn.
"While there was not a singular 'mega' catastrophe event [in 2018], there were 42 billion-dollar events which aggregated to a slightly above-average year," Aon Reinsurance Solutions CEO, Andy Marcell, said.
"The re/insurance industry continues to withstand the payouts, backed up by $595bn of capital, but focus [is needed] on managing the cost of weather events by closing the protection gap."