SIRC kicks off with focus on Asean co-operation, data and cyber, climate risks

October 31 2023 by

The 19th  Singapore International Reinsurance Conference (SIRС) themed ‘reinsurance reset’ has welcomed 2,772 delegates from 72 countries.

Mark Haushofer, chair of the Singapore Reinsurers’ Association, opened the conference in the Marina Bay Sands on October 30, noting the caliber of attendees, showcasing both the strength and the diversity of the industry which is on the tip of a revolution.

“[The reinsurance reset] atomises the key challenges that our industry is facing, and what needs to be done in the context of the prevailing uncertain and volatile risk landscape illustrated by prominent inflation, rising interest rates, economic depression, geopolitical tensions, cybercrime and increasingly frequent and costly climate related disasters,” he said.

He noted the overdue return to underwriting discipline, and its implications after enduring years of weak performance and soft market conditions, hoping that such momentum will sustain.

Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), noted Asia growth and infrastructure development, nat cat susceptibility, a growing elderly population and retirement safety as key regional growth drivers for the market.

Three areas to better address in APAC include risk mitigation, key data gaps on risks in and unlocking new insurance capacity. There are also emerging risks coming from US-China, Russia-Ukraine, Israel-Hamas tensions that have influenced global markets such as commodities, interest rates and climate risk.

He explained that Singapore has strengthened its position as a global (re)insurance market by increasing capacity, promoting insurance demand and fostering a conducive trading environment, Since 2013, gross written premiums grew by 80% to US$12.9 billion for insurance, and tripled to US$21 billion for reinsurance, an annual average of 13.6%.

Since 2013, Singapore has become the Asian hub for carbon credits, energy transitions and intellectual property. 24% of market share is in Singapore, 16 of the 25 top-reinsurance made it its regional hub, also working in North and South Asia and Australia.

Menon said: “The Nanyang Technological University of Catastrophe Risk Management, working with Asean governments and Secretariat has built an integrated data and analytics platform for flight title, and earthquake risks for the Asean region. But there are still very sizable data gaps with healthy economic growth. Additional urban centers and industrial centers have emerged in Asia, and the risks have evolved. There is simply not enough up to date, high resolution data on economic exposures and key peril in Asia.”

APAC reinsurance premiums are projected to grow at an annual average of 7% from US$171 billion in 2021 to US$246 billion in 2026.

Menon noted that there’s still a sizeable protection gap with industrial Asia centres emerging in recent decades and not being supported by enough data on economic exposure and key perils. Problems include nat cat exposure leading to US$80 billion dollars of economic losses in 2023 (so far), of which only 14%, US$11 billion, was insured. Flood losses accounted for more than 60% of nat cat losses last year.

Improvements could include robust drainage systems, green plantations acting as natural flood buffers and insurers investing in sustainable agricultural efforts.

Cyber risk
Asian economies are also the most exposed to cyber risk given the fast pace of digitilisation.

APAC accounted for 31% of all cyber incidents globally in 2018. The cyber insurance risks are expected to triple by 2025.

Menon said: “A deeper partnership between the insurance industry the cybersecurity sector, and policymakers can help improve cybersecurity and reduce cyber risk. We see the insurance industry publishing research on the types of cybersecurity controls, which made a difference based on the insights from claims data.”

He added: “We need to focus in addressing data gaps in Asia. This is the unfinished business from 10 years ago. In many cases, while data exists, it is fragmented across government agencies, reinsurers insurance brokers, academics and businesses. Data is in different formats not trained, not standardised, and hard to use, and access. Data gaps are particularly acute in new areas such as pandemic and climate risk, which are complex, evolving, and less understood.”

“In many cases, while data exists, it’s fragmented between academics, businesses, regulators, insurers – in particular acute in pandemic and climate risk, less understood, hard to use,” said Menon.

Unlocking new insurance capacity could be done through initiatives such as insurance-linked securities (ILS), captive insurance and sovereign catastrophe-risk pools.

MAS has a new grant to support ILS and is now exploring the introduction of corporate structures.

Captive insurers are becoming more common are corporates are increasingly creating captives for proactive risk management which is demonstrated by 82 captives in Singapore growing 14% to US$2.2 billion of premiums.

Regarding the most fragile economies such as the Pacific, Africa and Caribbean, risk pools remain the most viable solutions efficient for tropical cyclones, earthquakes, drought and epidemics with an example of pool US$1.5 trillion to support flood risk in Laos.

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