MAS to propel Singapore as insurance hub
TO provide financing quickly in the aftermath of disasters or catastrophic losses, Singapore has moved to develop alternative risk transfer mechanisms such as insurance-linked securities (ILS) and government pools.
Minister for Trade and Industry (Trade) Lim Hng Kiang, who is also deputy chairman of the Monetary Authority of Singapore (MAS), made the announcement at the 14th Singapore International Reinsurance Conference held recently.
To spur the development of Singapore’s ILS market, the MAS will fund 100 percent of the upfront costs incurred in issuing catastrophe bonds – basically assets that pay insurers if they suffer cataclysmic losses – out of Singapore.
Kiang said that the grant will run from Jan 1, 2018, and will be applicable to ILS bonds covering all forms of risks beyond just natural catastrophe risks.
“It is my hope that this grant scheme will encourage insurers and reinsurers to consider issuing a catastrophe bond here. In fact, MAS is already working with key industry players such as IAG Re Singapore with a view to issuing a catastrophe bond in Singapore.”
Already, an alternative risk transfer work-group comprising industry specialists in the ILS space, chaired by Jon Paradine of Renaissance Re, has been set up. Its purpose is to advise the MAS on specific initiatives that will support the development of Singapore as an ILS hub.
To tap the opportunities presented with China’s One Belt One Road (OBOR) projects, a Singapore-based infrastructure consortium has been formed, said Mr Lim. The consortium’s administrator is China Re Singapore.
The consortium will provide specialised insurance coverage and risk management services for OBOR projects in the Asia-Pacific region excluding China, by bringing together Singapore-based insurers, reinsurers and brokers.
The OBOR consortium will start with two lines of business – construction as well as project cargo and liability. The ultimate aim is to be a one-stop solution for property and casualty insurance, as well as other specialty insurance.
These are part of efforts to close the protection gap in the region and the government will also incubate insurance solutions for new and emerging risks including cyber, reputation and environmental liabilities. Another strategy, Lim said, is to transform the insurance market through technology and innovation.
