In his keynote address at the 20th Singapore International Reinsurance Conference (SIRC), Gan Kim Yong, Deputy Prime Minister and Minister for Trade and Industry, and Chairman of the Monetary Authority of Singapore (MAS), outlined a detailed plan to reinforce Singapore as Asia’s leading reinsurance hub.
While Yong’s keynote touched on numerous topics, one of the main themes was growing Singapore as the region’s dominant hub for reinsurance business.
“Through strengthening our insurance ecosystem, deepening capabilities, including in AI, and developing alternative risk transfer markets in Asia, we will reinforce Singapore as Asia’s leading reinsurance hub,” he said.
First, he explained that MAS will double down on the development of a marketplace of re/insurers in Singapore. The country is the Asia-Pacific hub for 12 top global re/insurers, and among reinsurers alone, 16 of the top 25 reinsurers have made Singapore their regional hub. Along with this, it also has a well-developed network of about 150 re/insurance brokers.
Yong encouraged insurers to expand into Singapore by leveraging regional underwriting expertise, building on the databases and models available, and strengthening the insurance marketplace that will allow Singapore to develop as a hub of risk financing solutions for Asia.
He also stated that MAS will work hand in hand with re/insurers to deepen their capabilities in numerous areas, notably AI.
“To support the scaling of AI with confidence, Singapore is developing a strong foundation of AI governance that balances the need for innovation with the responsible use of AI.
“MAS is working in partnership with leading insurers here under Project MindForge to develop a risk framework for the responsible use of GenAI for insurance use cases, including in AI-assisted underwriting and customer engagement. MAS will also be issuing a set of good practices next year for addressing AI model, technology and cyber risks. In tandem, we must build up our talent pool to harness the potential of AI,” said Yong.
Additionally, MAS plans to continue the expansion of insurance capacity through alternative risk transfer instruments, like sovereign insurance solutions, with Singapore being part of the Southeast Asia Disaster Risk Insurance Facility (SEADRIF).
SEADRIF has made USD 4.5 million in payouts to support flood response in Laos, including a USD 3 million payout in September 2024 following Typhoon Yagi.
Another example, Yong highlighted, is insurance-linked securities (ILS).
“Singapore is supporting the development of ILS markets in Asia to unlock additional risk financing capacity for peak catastrophe risks,” he said.
Of the 28 catastrophe bond issuances in Singapore over the past five years, Yong explained that 13 issuances have covered perils in Asia, providing USD 1.6 billion in coverage. But while this isn’t a bad start, he noted that this accounts for less than 5% of the global catastrophe bond market.
Yong said, “With their strong credit rating, good in-country relationships and sovereign support programmes, multilateral development banks can bring scale to ILS issuances in Asia by partnering sovereigns on programmatic issuances.”
Adding, “There is opportunity to channel some of the growing flow of investments from private wealth and institutional investors in Asia towards ILS – and to this end, MAS is partnering with the ILS industry to promote ILS as an asset class for private wealth and investment portfolios. Through such alternative risk transfer instruments, we can unlock additional risk financing capacity, and complement that provided by traditional insurers and reinsurers.”
This year, the theme for SIRC is “Driving Asia’s Growth – The Role of Reinsurance in Sustainable Development”. With this in mind, Yong’s address also delved into the four transitions in Asia that will drive the demand for reinsurance, including climate, energy, digital, and demographics.
“As Asia undergoes four fundamental transitions in the years ahead, there are opportunities for the reinsurance industry to play a key role in its growth and development, to insure a dynamic, sustainable and resilient Asia,” said Yong.
As underlined by Yong, Singapore’s reinsurance premiums grew 31% year-on-year to S$27.6 billion in 2023, accounting for roughly 21% of Asia’s reinsurance market.
Globally, reinsurance capital grew by 3.7% since the end of 2023 to reach a new high of USD 695 billion in the first half of 2024 amid retained earnings, more disciplined underwriting, and improved investment performance.
“This puts the reinsurance industry in a strong position to support the growth of Asia, as it navigates four key transitions in the years ahead – namely, climate, energy, digital, and demographic,” said Yong.
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