SINGAPORE (Reuters) -- Catastrophe insurers could be some of the few people to escape unscathed from climatic chaos wreaked by what experts expect to be the world's worst El Nino.

Low insured values and poor policy penetration should shield them from claims from the phenomenon, a weather system which analysts say could cost about US$20 billion in damage and lost business.

And it should help stem claims from the Atlantic hurricane season -- weakened by El Nino -- as weather-related losses this year switch instead to the Pacific.

"El Nino on its own will do nothing to affect our industry unless we have a major (individual) loss. We haven't had one yet,'' Jim Bryce, senior vice president and chief underwriting officer of Bermuda-based International Property Catastrophe Reinsurance (IPC Re) told Reuters in a telephone interview.

Mexico became the latest nation to suffer El Nino's wrath after Hurricane Pauline lashed it on Thursday, turning glamorous Acapulco into a death trap where about 400 people perished.

The country is no stranger to severe storms on its Caribbean coast, brought in by Atlantic storms, but is seldom hit so badly on the Pacific coast.

El Nino has turned the world's weather on its head.

Caused by warming in southern Pacific waters every two to seven years and affecting global weather patterns, El Nino-related storms and floods have thrashed Japan, China, Taiwan and Bangladesh, and brought drought to Indonesia and the Philippines.

Deaths are expected to be in the thousands and a bill for drought and flood devastation regionally could top US$20 billion.

But El Nino is a virtual non-event in insurance terms.

"Despite all the storm activity and drought, it hasn't been today a major insured, or reinsured event,'' said Charles Hayes, chief financial officer at Mid Ocean Reinsurance.

In Asia, though, aggregated losses are huge. The World Bank and aid agencies are set to bail out weather-ravaged nations.

This year's El Nino has partly fuelled Indonesian forest fires creating a suffocating smog that has cost businesses hundreds of millions of dollars across much of Southeast Asia.

Insurers say they do not expect significant claims.

Analysis of the 40 worst insurance losses between 1970 and 1996 shows almost all hit the United States and Europe while the 40 worst in terms of fatalities were predominantly in Asia.

El Nino serves to focus the losses entirely on Asia.

"It's more or less a quirk of the penetration of the insurance product around the world,'' Charles Kline, president of insurer Cat Ltd., told Reuters.

"The net result on us is that it tends to reduce losses from one of our main areas of underwriting and does not increase it appreciably anywhere else,'' Natural catastrophes cost insurers about US$7.9 billion in 1996 -- the best so far this decade and the lowest since 1988 -- but less than ten percent was paid for claims in Asia.

A good 1997 in terms of low catastrophe insurance claims seems certain, said a report last week from the US Property Claim Service which revealed an uncharacteristically quiet hurricane season in the Atlantic.

It was only the third year since 1886 that no named storm formed in the Atlantic Basin in August, the report said.

Bill Gray, a professor at Colorado State University and the foremost forecaster of hurricanes, said the relative calm was courtesy of El Nino which had disrupted hurricane formations.

This too is good news for insurers, who faced a crisis in 1992 after Hurricane Andrew created the world's worst insured catastrophe and saddled them with a bill of US$18 billion.

The crisis spawned a US$4 billion reinsurance market virtually overnight in Bermuda, where most of the world's catastrophe underwriting capacity and expertise now resides.

Since then losses from natural catastrophes have fallen every year, putting pressure on profits as rates have been slashed by catastrophe underwriters.

Reinsurers say they need two major insured losses of between US$10-20 billion to get rates back to profitable levels.

Paradoxically, while El Nino may be one of the worst weather disasters on record, its impact will not help harden rates.

"That's a pretty fair evaluation,'' said IPC Re's Bryce. But when people say we've had a long time without a serious loss, my answer to that is that maybe we're overdue for one.

"The rear-view mirror is not the best way of seeing what is going to happen in the future.''