Singapore will benefit from ILS
Singapore is looking to establish itself as an insurance-linked securities (ILS) hub in Asia to take advantage of rising market demand, George Attard, chief executive officer Asia for Aon’s Reinsurance Solutions business, told SIRC Today.
Fitch believes more reinsurers will issue ILS in Asia, especially in Singapore, where the regulator has fully funded the upfront costs incurred in issuing catastrophe bonds out of Singapore since January 2018.
The region has regulation in place for a special purpose reinsurance vehicle (SPRV), and there are plans to introduce regulation for the creation of a protected cell company (PCC) for collateralised reinsurance.
So far, risk models for the region have lacked granularity but this is changing, paving the way for the issuance of ILS, Attard said.
“ILS is usually deployed in areas that are well modelled so that the risk can be quantified, using the cat model output as the currency to exchange risk. ILS funds are active in the Asia-Pacific regional retrocession space, but due to pricing, lack of data and overcapacity issues, there has been little interest shown in domestic reinsurance programmes to date.
“However, we are seeing increasing investment from modelling companies, bridging the gaps in the modelling landscape” he said.
Risk modelling and data analytics firms have been increasing the coverage of perils and territories in the region. “As confidence builds around the models and the ability to quantify the risk we’ll see more ILS deployed into the region,” he explained.
Japan and Australia have already seen risks being transferred via ILS.
“We are starting to see increasing attention here in Asia to the extent that the Monetary Authority of Singapore is active in supporting the establishment of ILS into the Singapore market and building Singapore into another ILS hub supporting the region,” Attard said.
Globally, the catastrophe bond limit on-risk has reached $30 billion during the 12 months to June 30, 2018—an increase of $4.2 billion from the prior year period, and a new record for the sector, Aon noted in its report Alternative Capital Fortifies Its Position.
The amount of alternative capital in the re/insurance sector stood at a record $98 billion, the report noted. In the 12 months to June 30, $9.7 billion of catastrophe bonds were issued across 29 transactions, the second highest issuance figure for the period on record, according to Aon Securities.
Get all the latest re/insurance industry news with our daily newsletter - sign up here.
More of today's news from SIRC
Hannover Re eyes solid growth in Asia despite competition
Costly cat year will impact pricing in Asia-Pacific
New MGA launched at SIRC targets cyber growth in Asia
There is opportunity amid the changing landscape
Diversifying Chinese cedants to boost reinsurance growth
Cats to stabilise renewals: ACR
Outfoxing competitors for growth
Already registered?
Login to your account
If you don't have a login or your access has expired, you will need to purchase a subscription to gain access to this article, including all our online content.
For more information on individual annual subscriptions for full paid access and corporate subscription options please contact us.
To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.
For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk
Editor's picks
Editor's picks
More articles
Intelligent Insurer
Newton Media Ltd
Kingfisher House
21-23 Elmfield Road
BR1 1LT
United Kingdom