SINGAPORE - The Monetary Authority of Singapore (MAS) has a vision for the Republic, and it is for it to grow into a global insurance marketplace by 2020.
Growth prospects for the global insurance industry, particularly in Asia, have never been better, and the Asian risk landscape is transforming rapidly, generating robust demand for insurance and reinsurance, said MAS managing director Ravi Menon yesterday.
Delivering his keynote speech at the 12th Singapore International Reinsurance Conference, he said: "At a time when questions are being raised globally as to whether the financial industry has grown too big, no one is asking the same of insurance. Much of the world remains under-insured."
Over the next decade, the insurance business in Asia is projected to grow at about 8 per cent a year. By 2020, Asia is likely to account for almost 40 per cent of the global market.
Singapore is already recognised as Asia's leading reinsurance hub, he said. Sixteen of the world's top 25 reinsurers have regional hubs here.
"The market has built up significant expertise in specialty insurance, namely marine, energy, catastrophe, credit and political risks. For example, Singapore is the second-largest market for structured credit and political risk worldwide after London," he said.
Most Asian risks, including entire large reinsurance programmes and speciality risks, can now be fully placed in Singapore. MAS's vision is thus for Singapore's insurance industry to accept not just regional, but global risks by 2020, Mr Menon said.
To get there, MAS has four strategies, which are to:
- increase supply-side capacity;
- promote insurance demand here and in the Asia-Pacific;
- develop a true marketplace for sellers and buyers to come together to negotiate and trade risks; and
- foster a conducive business environment.
MAS will work with existing players to build up their speciality and reinsurance underwriting and broking capabilities and to expand their regional hubs, he said.
It will also seek to broaden the industry by promoting growth in emerging business lines, such as cyber risks, though efforts in this area might be stymied by a lack of Asian data.
MAS is working with the industry to create a test bed for cyber risks, so that insurers and potential clients can come together to simulate loss events, he said.
On promoting Asian demand, Mr Menon said that cross-border access has to be improved and increasing the pool of Asian risk data is critical. Asean is working towards a comprehensive insurance liberalisation framework, with 2020 being the target year for substantial liberalisation in the industry.
The framework is expected to be discussed at the Asean Finance Ministers' Meeting next year.
As for paucity of data on Asian risks, Singapore is addressing the gap by setting up several research institutions to gather and analyse data in specific areas of risks, said Mr Menon.
For example, the Institute of Catastrophe Risk Management at the Nanyang Technological University is researching flood and earthquake risk assessment in selected Asian cities.
A thriving hub needs a broker network, which has been growing here, he said. The vibrant broking cluster here has played a central role in facilitating business flows, and plays host to more than 70 insurance brokers. Four of the world's top five brokers have their regional hubs here.
Today, brokers are not just intermediaries, but also high-value service providers that drive innovation and collaboration in the industry, he said.
A good example of this is Aon, which recently established its Analytics and Innovation Center here to provide analytics solutions to the group's business units on a global basis, he added.
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