Singapore: a risk transfer hub for Asia

If you want to understand why the London Market continues to lose market share, you could do worse than take a close look at Singapore. Whereas business from across Asia once flowed to London as a matter of course, it is increasingly being dealt with by underwriters working with capacity in Singapore.

This dynamic is perhaps encapsulated in what has happened at Beazley in the past 12 years. In 2006, the carrier launched an office in Singapore with one underwriter and one line of business. Fast-forward to 2018 and 30 people operate from the office across 10 lines of business. It has become a hub for Beazley covering the whole of Asia-Pacific, and it continues to grow.

“We have invested strongly in the market for the past 12 years and we now have a robust platform there, which is very much a pan-Asian operation for us,” says Lucien Mounier, head of Asia-Pacific operations, Beazley.

“We see it as an expansion of our strategy in London but we also see business from Japan to Africa and everywhere in between. We would not be seeing that if we did not have a physical presence here,” he adds.

Mounier explains that over the past 12 years, a lot more business has been retained in Asia and placed locally, and Singapore has established itself as a risk transfer hub in the process. “The market has grown and matured a lot in that time and that means we also need to deploy capacity and have expertise here,” he says.

“We now have underwriters on the ground in each line of business who understand the region and the cultures. They are empowered to build a business—we still have strong links to the mother ship in London but the strategy is to empower the local people.”

Local knowledge

Nicholas Tey, head of specialty lines in Asia for Beazley, adds that buyers in Asia typically prefer to place business locally.

“They prefer to work with people who understand the language and culture, are in the same time zone, and who can underwrite in local languages. It also prevents friction in the business, in terms of layers of capacity and underwriters,” he says.

He adds that local knowledge can go a long way when dealing with a certain type of risk—and ultimately a claim. “There are many nuances to the business here. Third party liability, for example, can be very different in parts of Asia, as can many areas of litigation. As such, many buyers believe that placing business locally is just more efficient.”

Mounier adds that many other companies have taken a similar approach to Beazley in the last decade. Add the Lloyd’s presence in the market and there is abundant capacity—and access to specialist expertise.

He also praises the work of the regulator and the government during that time in making the business environment in Singapore conducive to this type of growth in the risk transfer sector.

“Different Asian countries have moved at different paces in liberalising their regimes, but Singapore has allowed itself to become an insurance hub—it has built an ecosystem of global brokers and carriers,” he says.

Product range

Beazley started in the market in the engineering sector—writing mainly single project construction risk. Today, its offering is much more diverse, writing lines of business including marine, cargo, aviation, political risk, terrorism, financial lines and event cancellation insurance as well as some property treaty reinsurance.

Mounier says that the insurer decides which lines to focus on based on the needs of the market—as opposed to following a pre-prescribed plan or basing it on available talent.

“Even in a soft market there are pockets of opportunity,” he says. “We look for opportunities in terms of products and demand.”

Tey says that the business has seen solid growth in financial lines in recent years, as the needs of Asian buyers have become more sophisticated, and in specialty lines, where specific growth areas include transactional liability, cyber and surety treaty.

Beazley has also enjoyed success working with smaller businesses, where it aims to provide more niche products but in a very efficient manner.

Perhaps its biggest area of growth has been in cyber. Tey stresses that the nature of the coverage required is very different in Asia, which does not have data protection laws coming into force such as the EU General Data Protection Regulation. Companies’ exposure is different but there remain many opportunities despite this.

“Cyber has been a buzzword for several years and we have been writing business for a while, with a desire to grow the portfolio further over the coming years,” he says.

“The coverage here is more based around business interruption risk and cyber extortion. People are looking at cyber in different ways and we are looking at how we can better reach out to brokers and offer a product, whether that is via direct insurance, reinsurance or a white label—we are very flexible.”

Mounier says that while rates remain challenging in general, the momentum of rate reduction has slowed and there are many pockets of business where rates are improving, especially in speciality lines.

“There is a lot of capacity out there but it is a question of identifying the opportunities and making sure our solutions are different and more attractive.”

In terms of Beazley’s continued growth, he adds that one of its strategies is simply to raise awareness of the breadth of products it offers—so that brokers in each country are aware of the company’s skillset and expertise across the board.

“We might start by writing a particular line of business in a country, but we want now to roll out what we offer in each,” he says.

He adds that the Beazley culture has always been based around the principle of profitable growth. While the traditional market remains generally flat—in terms of growth and rates—speciality lines and bespoke opportunities can offer much more attractive business.

“Most Asian economies are still seeing strong growth so business is growing, propelled by changing regulations, increased connectivity and general economic growth. All this means more opportunity and we have the platform in Singapore to take advantage of this,” Mounier concludes.

Lucien Mounier is head of Asia-Pacific operations at Beazley. He can be contacted at:  lucien.mounier@beazley.com

Nicholas Tey is head of specialty lines in Asia at Beazley. He can be contacted at:  nicholas.tey@beazley.com