Singapore Deputy PM hails SIRC’s evolution

The 20th Singapore International Reinsurance Conference (SIRC) opened on November 4 with an appeal for delegates to debate and consider the shifts occurring in Asia’s insurance landscape. 

Addressing assembled delegates from 65 countries, Singapore’s Deputy Prime Minister and chairman of the Monetary Authority of Singapore (MAS), Gan Kim Yong, welcomed attendees and then underscored the resilience of the sector and the strategic role Singapore plays in bolstering reinsurance throughout Asia.

Gan praised SIRC’s evolution since its 1991 inception, saying: “The SIRC has grown into a leading forum for reinsurers and insurance and reinsurance brokers to discuss topical issues facing the global reinsurance industry, as well as a networking platform for reinsurance deals.”  

The robust attendance mirrors Singapore’s stronghold as a reinsurance hub. This was underscored by Singapore’s impressive 2023 figures, which included a 31 percent year-on-year growth in reinsurance premiums, which reached $27.6 billion. This represents some 21 percent of Asia’s market. 

The industry, Gan noted, has become more disciplined. Reinsurers globally have broadly returned to profitability, posting a return on equity in the first half of 2024 of more than 17 percent. He linked this resurgence to improved underwriting, sustained investment gains, and rigorous risk management. However, the path forward will be shaped by four pivotal transitions: climate change, energy transformation, digital growth, and shifting demographics. 

The reinsurance industry is no stranger to climate-related risks, Gan warned. “It is not so much that climate change is happening, but the pace at which it is accelerating,” he said. The escalating frequency of natural catastrophes, which now incur annual insurance losses averaging well over $100 billion, reveals the urgent need for enhanced risk models. Gan emphasised that Asia is particularly vulnerable to these shifts, and faces a daunting protection gap, with 91 percent of economic losses in the region not insured in 2023. 

To counter these challenges, Gan urges collaboration among insurers, governments, and research institutions. “Singapore has close to 10 institutions providing research and insights on the physical impact of climate risk,” he pointed out, advocating for these as vital resources for developing advanced risk assessment frameworks and more resilient insurance solutions. 

Gan added that Asia’s path to net zero carbon is equally pressing, as the continent accounts for half of global greenhouse gas emissions. Transitioning energy sources requires significant financial and insurance backing. 

“Investments in renewable energy generation in Asia-Pacific are forecast to double to $1.3 trillion by 2030,” Gan noted, emphasising the need for tailored insurance products that address the specific risks associated with renewables. 

The nature of renewable energy projects, which face risks from severe weather and energy storage integration, means that insurers must innovate. Gan highlighted the importance of parametric insurance and pre-financial investment decision solutions as ways to bridge these gaps. 

“MAS is studying ways to support the growth of parametric insurance,” he added, signalling future policy initiatives to foster this sector. 

Cyber and demographics

As the Asia-Pacific digital economy surges towards a projected $2 trillion by 2030, cyber risks will proliferate, pushing demand for cyber insurance. “The Asia-Pacific cyber insurance market is estimated to double from 2023 to 2027,” Gan said. He called for collaboration on advanced risk models and proactive cybersecurity measures to mitigate potential losses. 

“Through such alternative risk transfer instruments, we can unlock additional risk financing capacity.”

Demographics, too, pose strategic challenges. Ageing populations across the region are driving up demand for long-term healthcare and life insurance. By 2026, Singapore itself will become a “super-aged” society, with a substantial number of citizens over the age of 65. 

“This will drive demand for long-term healthcare, pensions, and financial products,” Gan said, highlighting the necessity for life insurers to adapt to more complex liabilities. 

To navigate these transitions, Singapore aims to strengthen its insurance ecosystem and boost capabilities in artificial intelligence and alternative risk financing, such as insurance-linked securities (ILS). 

“Through such alternative risk transfer instruments, we can unlock additional risk financing capacity,” Gan affirmed, positioning Singapore as a pivotal leader in Asia’s reinsurance evolution. 

With these strategic actions, Singapore is set to guide the region’s insurers in facing the dual challenge of rapid growth and the profound shifts shaping the future, he concluded. 

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