Singapore Announces Lofty Ambition to Become Insurance Hub
Singapore aims to become a global insurance marketplace by 2020, said Monetary Authority of Singapore (MAS) managing director Ravi Menon in his keynote speech at the 12th Singapore International Reinsurance Conference on today.
This is an interesting time for the insurance industry, noted Mr Menon.
“Underwriting results are being pressured by a combination of sluggish economic growth, softening rates, and rising claims,” commented Mr Menon. “Investment returns are being depressed by the low interest-rate environment. Regulatory and capital requirements are being tightened as the world shifts toward risk-based regimes like Solvency II.”
At the same time, there are opportunities as much of the world remains under-insured.
By 2020, Asia is likely to account for almost 40 per cent of the global insurance market.
The factors driving Asia’ demand are an ageing population; a geographical area that is highly prone to natural catastrophes; and a growing economy.
Presently, Singapore is recognised as the leading reinsurance hub in Asia. Among the top 25 reinsurers in the world, 16 have regional hubs here.
Since 2000, offshore business has been on a steady uptrend, growing an average of 13 per cent per annum to US$5.4bn in 2012. The share of offshore non-life business has increased from 50 per cent in 2000 to 65 per cent in 2012.
In addition, “the market has built up significant expertise in specialty insurance, namely marine, energy, catastrophe, credit and political risks,” he said. “For example, Singapore is the second-largest market for structured credit and political risk worldwide after London.”
Most Asian risks, including entire large reinsurance programmes and specialty risks, can now be fully placed in Singapore.
“Our vision is for Singapore’s insurance industry to become a global marketplace by 2020, with the ability to accept not just regional, but global risks,” he said.
MAS is pursuing four strategies to achieve that 2020 goal, Mr Menon said. They are to increase supply-side capacity; to promote insurance demand, both locally and in the Asia-Pacific; to develop a true marketplace, where sellers and buyers come together to negotiate and trade risks; and to foster a conducive business environment.