Singapore to Play a Bigger Role as a Reinsurance Hub
4 October 1999... Minister for Health and Second Minister for Finance Mr Lim Hng Kiang today urged reinsurers in Singapore to expand their business scope, to contribute to Singapore's vision of becoming a leading reinsurance centre in Asia.
2 Speaking at the 5th Singapore International Reinsurance Conference co-organised by Singapore College of Insurance and the Singapore Reinsurers' Association, Mr Lim noted that the global insurance market had undergone dramatic changes in the last decade. There is now greater emphasis on holistic risk management approach, and new innovations as well as mergers and acquisitions have led to increased competition for insurers.
3 Mr Lim remarked that Singapore is well positioned to play a bigger role as a leading reinsurance centre in Asia. There is now a total of 48 professional reinsurers based in Singapore, with 20 of the world's top 25 global reinsurance groups represented here. In 1998 alone, premiums attributable to reinsurers amounted to S$1 billion, of which about 80% of this was sourced from offshore markets. Reinsurance premiums' average compound growth for the last ten years of 10% per annum is also comparable to global industry figures.
4 Mr Lim however recognised that more could be done and outlined a four-pronged strategy to further develop Singapore's reinsurance sector :
(1) Encouraging Players To Expand Their Scope and Operations -- Reinsurers with Singapore operations are encouraged to expand the scope and underwriting authority of their local branches and book more offshore business in Singapore, including the underwriting of more big-ticket items such as marine and financial guarantee risks. At the same time, Singapore will continue to attract internationally reputable and financially strong new players to help build up a more dynamic and innovative industry through the introduction of specialised products and total risk solutions;
(2) Encouraging Product Innovation -- Singapore-based reinsurers are encouraged to respond to market developments and adopt a more holistic approach to risk management programmes in order to tailor programmes to meet their clients' needs better. In addition, the proliferation of non-traditional Alternative Risk Transfer (ART) products such as financial reinsurance and risk securitisation give insurance buyers an alternative source of risk coverage and protection. Reinsurers would thus have to integrate financial expertise with risk analysis competencies in order to meet clients' needs.
(3) Leveraging on Advancements in IT -- Reinsurers can take advantage of Singapore's well-developed IT and communications infrastructure to drive initiatives such as electronic placement of risks through e-commerce networks linking brokers, reinsurers and buyers, as well as streamlining of back-office operations.
(4) Nurturing A Pool of Insurance Professionals -- To meet the anticipated growth of the insurance industry, there is a need to build up the pool of insurance professionals through training grants such as the Financial Sector Development Fund and the existing Initiatives for New Technology (INTECH) Scheme for Insurers.
5 Noting that the Monetary Authority of Singapore (MAS) had recently put in place various fiscal incentives and new regulatory guidelines to make the operating environment more conducive for insurers, Mr Lim said, "The concept of risk management is beginning to take root in Asia and this presents new opportunities. We are confident that Singapore can take on a bigger role as a reinsurance hub, and urge existing as well as new players to harness the opportunities and meet the new challenges available in Asia."