By Clare Davidson
Business reporter, BBC News
Thousands of people were displaced by 2005's storm season
Until recently, a natural catastrophe costing $60bn (£32bn) was inconceivable except in Hollywood disaster films.
Hurricane Katrina, which hit the US on 29 August last year, changed all that.
Some 1,300 people were killed and thousands were - and remain - displaced.
"Katrina acted as a wake-up call," says Chris Walker, managing director of greenhouse gas risk solutions at re-insurance giant Swiss Re.
The event caused the single largest insurance loss recorded so far, costing more than $40bn in six states. Claims remain unsettled one year on.
Today the insurance industry is preparing for something far worse.
Insurance market Lloyd's of London has developed a $100bn scenario which imagines two simultaneous hurricanes of the severity of Katrina.
In June, the group issued an unambiguously-titled report called Climate Change, Adapt or Bust.
"Investment in research and a change in industry behaviour is long overdue," the report says.
"It is clear that the frequency and severity of natural catastrophes is increasing", says Julian James, Lloyd's of London director of worldwide markets.
Lloyd's says the industry needs a new approach to underwriting by looking ahead rather than at historical data.
"If we don't take action now to understand the changing nature of our planet and its impact, we will face extinction," says Rolf Tolle, Lloyd's franchise performance director.
For the first time, Lloyd's is sponsoring two climatologists to complete doctorate degrees.
Addressing a packed Lloyd's-sponsored event on climate change, Bill McGuire, a geohazard professor at University College London, warned audience members "you haven't seen nothing yet, climate change will come to dominate everything we do".
Disagreement might remain over the degree to which climate change is the result of human activity. However, "denial about the existence of climate change is pretty isolated", says Mr Walker.
The property paradox
Climatic events that were previously thought likely to happen once a century could now occur once every 25 years, inevitably pushing up insurance premiums.
Paradoxically, some of the most desirable residences are also often those most exposed to floods and storms, says Robert Hartwig, chief economist with the Insurance Information Institute.
But state insurance programs have failed to reflect this, he says.
"Millionaires on the coast have been subsidised by people in trailer-homes," he said.
State-run schemes demand everyone pay into such schemes, regardless of exposure.
Mr Hartwig and others argue that the riskier the property, the more expensive the premium should be.
"The myriad of government and state federal programmes should be dramatically overhauled," he says.
Many state insurance schemes now face bankruptcy after underwriting properties that should never have been given insurance, says Mr Hartwig.
Devil in the detail
One of the most complex aspects of resolving claims from Katrina lies in the detail and the scope of the claims.
Many claimants thought they were covered, while insurance firms said they were not.
Arguments have often hinged on whether destruction to a property was caused by wind or flood damage in the final instance.
New levees have been built but much remains to be done
Insurance professionals say policies will be clearer in future to avoid any confusion.
"Policies will be more black and white," says Mr Hartwig.
But it is not just consumers for whom clarity is desirable.
Firms that face huge potential risks of interrupted business following natural disasters also crave predictability.
Ultimately, insurance remains an inexact science based on risk assessment.
However, as "the risk bearer of last resort... reinsurance firms need to be anticipatory regarding the impact of climate change," says Swiss Re's Mr Walker.
But as Lloyd's of London chairman Lord Levene told firms, scientists, entrepreneurs and government officials, quoting Edmund Burke: "Nobody made a greater mistake than he who did nothing because he could do only a little."