Overcapacity driven by success
There is an oversupply of capacity in the Asia-Pacific region, which is driven in part by the success of Singapore as a regional reinsurance hub, according to Nick Orton, senior international treaty underwriter at Hiscox Re & ILS.
Singapore’s insurance market comprises the Singapore Insurance Fund (SIF), which governs Singapore policies for insurers, and the Offshore Insurance Fund (OIF), which governs offshore policies.
SIF’s gross premiums in 2017 were S$3.96 billion, up from S$3.23 billion in 2010, and $1.7 billion in 2000, according to statistics from the Monetary Authority of Singapore (MAS), Singapore’s central bank and regulator. The gross premiums for OIF in 2017 were S$8.73 billion, up from S$5.35 billion in 2010, and S$1.7 billion in 2000.
Hong Kong’s Financial Services Development Council (FSDC) had previously said that the jurisdiction is losing reinsurance business to Singapore.
Singapore is also working towards becoming a global hub for insurance-linked securities (ILS) in Asia. MAS announced in November 2017 that it would fund 100 percent of the upfront costs from issuing catastrophe bonds locally from January 2018 onward.
“We find that the limits purchased still fall some way below what you would see in other markets,” Orton added.
He suggested that Hiscox Re & ILS has a strong market presence in Japan and Australia—two geographies it has chosen to focus on where it has long-term relationships with core partners.
Outside these two markets, he noted, there is strong competition from reinsurers, and market terms and conditions prevent Hiscox from participating to the extent it would like in those markets, Orton explained.
“We focus on offering bespoke product solutions to our core partners, and continue to be a lead market for agriculture reinsurance,” he said.
“An area where we see growing interest is parametric solutions, which we are well placed to provide. Personal lines insurance is another area we believe has significant potential for growth in the region.”
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