The 19th Singapore Worldwide Reinsurance Convention (SIR?) themed ‘reinsurance reset’ has welcomed 2,772 delegates from 72 international locations.
Mark Haushofer, chair of the Singapore Reinsurers’ Affiliation, opened the convention within the Marina Bay Sands on October 30, noting the caliber of attendees, showcasing each the energy and the variety of the trade which is on the tip of a revolution.
“[The reinsurance reset] atomises the important thing challenges that our trade is going through, and what must be accomplished within the context of the prevailing unsure and unstable threat panorama illustrated by outstanding inflation, rising rates of interest, financial melancholy, geopolitical tensions, cybercrime and more and more frequent and dear local weather associated disasters,” he stated.
He famous the overdue return to underwriting self-discipline, and its implications after enduring years of weak efficiency and mushy market circumstances, hoping that such momentum will maintain.
Ravi Menon, managing director of the Financial Authority of Singapore (MAS), famous Asia development and infrastructure growth, nat cat susceptibility, a rising aged inhabitants and retirement security as key regional development drivers for the market.
Three areas to higher deal with in APAC embrace threat mitigation, key knowledge gaps on dangers in and unlocking new insurance coverage capability. There are additionally rising dangers coming from US-China, Russia-Ukraine, Israel-Hamas tensions which have influenced world markets reminiscent of commodities, decrease rates of interest and local weather threat.
He defined that Singapore has strengthened its place as a worldwide (re)insurance coverage market by growing capability, selling insurance coverage demand and fostering a conducive buying and selling setting, Since 2013, gross written premiums grew by 80% to US$12.9 billion for insurance coverage, and tripled to US$21 billion for reinsurance, an annual common of 13.6%.
Since 2013, Singapore has grow to be the Asian hub for carbon credit, power transitions and mental property. 24% of market share is in Singapore, 16 of the 25 top-reinsurance made it its regional hub, additionally working in North and South Asia and Australia.
Menon stated: “The Nanyang Technological College of Disaster Threat Administration, working with Asean governments and Secretariat has constructed an built-in knowledge and analytics platform for flight title, and earthquake dangers for the Asean area. However there are nonetheless very sizable knowledge gaps with wholesome financial development. Extra city facilities and industrial facilities have emerged in Asia, and the dangers have advanced. There may be merely not sufficient updated, excessive decision knowledge on financial exposures and key parallels in Asia.”
APAC reinsurance premiums are projected to develop at an annual common of seven% from US$171 billion in 2021 to US$246 billion in 2026.
Menon famous that there’s nonetheless a sizeable safety hole with industrial Asia centres rising in latest a long time and never being supported by sufficient knowledge on financial publicity and key perils. Issues embrace nat cat publicity resulting in US$80 billion {dollars} of financial losses in 2023 (up to now), of which solely 14%, US$11 billion, was insured. Flood losses accounted for greater than 60% of nat cat losses final yr.
Enhancements might embrace strong drainage techniques, inexperienced plantations appearing as pure flood buffers and insurers investing in sustainable agricultural efforts.
Cyber threat
Asian economies are additionally essentially the most uncovered to cyber threat given the quick tempo of digitilisation.
APAC accounted for 31% of all cyber incidents globally in 2018. The cyber insurance coverage dangers are anticipated to triple by 2025.
Menon stated: “A deeper partnership between the insurance coverage trade the cybersecurity sector, and policymakers may also help enhance cybersecurity and cut back cyber threat. We see the insurance coverage trade publishing analysis on the forms of cybersecurity controls, which made a distinction primarily based on the insights from claims knowledge.”
He added: “We have to focus in addressing knowledge gaps in Asia. That is the unfinished enterprise from 10 years in the past. In lots of instances, whereas knowledge exists, it’s fragmented throughout authorities companies, reinsurers insurance coverage brokers, teachers and companies. Knowledge is in numerous codecs not skilled, not standardised, and laborious to make use of, and entry. Knowledge gaps are notably acute in new areas reminiscent of pandemic and local weather threat, that are advanced, evolving, and fewer understood.”
“In lots of instances, whereas knowledge exists, it’s fragmented between teachers, companies, regulators, insurers – specifically acute in pandemic and local weather threat, much less understood, laborious to make use of,” stated Menon.
Unlocking new insurance coverage capability could possibly be accomplished by way of initiatives reminiscent of insurance-linked securities (ILS), captive insurance coverage and sovereign catastrophe-risk swimming pools.
MAS has a brand new grant to help ILS and is now exploring the introduction of company buildings.
Captive insurers have gotten extra frequent are corporates are more and more creating captives for proactive threat administration which is demonstrated by 82 captives in Singapore rising 14% to US$2.2 billion of premiums.
Concerning essentially the most fragile economies such because the Pacific, Africa and Caribbean, threat swimming pools stay essentially the most viable options environment friendly for tropical cyclones, earthquakes, drought and epidemics with an instance of pool US$1.5 trillion to help flood threat in Laos.