ILS, captives and alternative risk transfer set to surge across Asia

“Insurance-linked securities (ILS) are gaining traction in Asia-Pacific,” according to David Hullin, a member of the HDI Global SE executive board, responsible for the regions Europe (without Germany), Americas, ASEAN, South Africa, and the Middle East. The momentum has primarily catered to the needs of professional insurance and reinsurance firms, he told SIRC Today.

HDI is monitoring these developments closely and is ready to capitalise on this emerging trend. “Hannover Re is already very strong in that field,” Hullin said. “If it becomes a market also for corporates, for instance behind captives, we at HDI Global should be ready in any case where a need for ILS will materialise.”

“The Asia-Pacific region has many vibrant markets with dynamic economies.”

This foresight extends to other strategic opportunities, particularly the burgeoning captive insurance market. “The number of captives in the Asia-Pacific region is growing fast, driven by the regulatory environment. In Labuan, about 70 captives are already licensed, and more than 80 captives have been established in Singapore to date,” he added.

With a landscape full of evolving risks, HDI Global is expanding its focus on alternative risk transfer (ART) solutions. “The Asia-Pacific region has many vibrant markets with dynamic economies continuing to evolve, generating new risks to cover and potentially requiring alternative ways to tackle them,” Hullin noted. 

He underscored HDI’s comprehensive offerings, from self-insurance and conventional risk transfer to access to third-party capital. “With our Captive Services unit, we enable corporations which own a captive company to manage some of their risks. HDI Enablers offers structured and parametric re/insurance solutions, which can also interact with a corporation’s captive,” he explained.

Ahead of the game

Hullin highlighted how HDI Global is staying ahead of market demands with tailored ART solutions. “Some Asia-Pacific countries are already established captive domicile hubs while others are accelerating in the ART field to a larger extent, leveraging the use of risk finance solutions,” he said. 

Singapore and Labuan stand as key hubs, and Hullin also sees promise in emerging ART developments across Hong Kong, India, and Japan. “The overall trend to use ART for developing solutions to tackle current challenges is there across the whole Asia-Pacific region,” he added.

HDI is making “significant local investment in energy transition across Asia-Pacific—particularly in solar and wind”, aiming to help clients transition to sustainable energy initiatives.

“With the rise in construction, transportation, and energy projects, there is an increasing need for specialised industrial insurance products to cover the unique risks associated with these developments,” Hullin observed. He pointed to Asia’s status as a global manufacturing hub, particularly in electronics, automotive, and textiles, as an area where HDI can offer bespoke insurance solutions.

“Climate change is a major concern for Asia-Pacific, as the region faces a growing frequency of natural catastrophes, including typhoons, earthquakes, and floods. Addressing these emerging risks while offering state-of-the-art solutions is essential in our approach,” Hullin noted.

Overall, Hullin sees a “favourable economic environment” in Asia-Pacific. Achieving its objectives here requires a tailored approach and “selective inorganic growth in targeted markets”.

For HDI, several key factors play a significant role. “Asia-Pacific is home to some of the world’s fastest-growing economies, with various countries experiencing robust gross domestic product growth, which drives increased industrial activity and demand for coverage,” Hullin explained.

“Ongoing urbanisation across many Asia-Pacific countries is fuelling extensive infrastructure development projects.”

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