"Singapore - Becoming an ILS Domicile for Asia" - Opening Speech by Ms Gillian Tan, Executive Director, Monetary Authority of Singapore, at Artemis ILS Asia 2019 on 11 July 2019
2 Artemis’ conference today will provide a platform for ILS sponsors and investors alike, to exchange and share valuable experiences and keep up to date with developments in the ILS market.
- In 2018, FloodSmart Re was issued by the US Federal Emergency Management Agency (FEMA). FEMA was a first time issuer and FloodSmart Re was the first US flood cat bond.
- We also saw the Cal Phoenix bond, the first cat bond to solely cover wildfire, which was issued by a first time corporate issuer.
- First, Data. Unlike more mature markets like the US, Europe, Japan and Australia, which have the most organised data and the most developed models to support risk securitisation, the rest of Asia still suffers from a lack of standardised and good quality data. There are gaps in modelling and valuation which can make pricing challenging. This is one of the key reasons why ILS has not taken off in Asia in the past. The Natural Catastrophe Data Analytics Exchange, led by the Nanyang Technological University’s Institute of Catastrophe Risk Management, together with the industry consortium and PERILS AG, aims to bridge the natural catastrophe data gap in Asia. NatCatDAX uses remote sensing capabilities and advanced methodologies to create a comprehensive open-source database combining economic exposure and loss data with industry data. The NatCatDAX is expected to be completed by March 2020, and it will increase the availability of quality data in the region. This will support the understanding of Asian risks and the valuation needs of investors.
- Second, awareness and education. We can do more as a market to educate sponsors on how ILS can contribute to a more effective risk management strategy, and create more innovative structuring solutions. Singapore works closely with international organisations like the World Bank and the Asia Development Bank to explore ways to support sovereign issuers that have begun to show strong interest to build ILS into their disaster risk and financing strategy. Apart from sovereign issuers, there is also a strong pipeline of interest by insurers and reinsurers in the region that are new to the market. We are hopeful to see a breakthrough in new countries and sponsors in Asia tapping on the ILS market to protect their risks. This would also bring diversification in the geographical coverage of catastrophe exposures to investors. From the capital supply perspective, Asia provides less than 9% of ILS capital, with only specialty ILS fund managers, and a small number of larger pension funds and institutional investors taking on these risks. Raising the awareness of ILS as an alternative asset class would be a crucial next step to drive interest in ILS products.
- The third factor is proximity to market. Having a marketplace within Asia, including an efficient domicile and access to ILS service providers in the same time zone, would be beneficial to the ILS market in Asia. The ecosystem here has to complement the global service providers who have been the leading forces for the market, while also adapting to the unique risks and culture in Asia, to better respond to Asia’s ILS needs.
- Orchard ILS was the first SPRV licensed in Singapore and its cat bond was the first to be issued out of Singapore and an Asian domicile. It was also IAG’s first catastrophe bond.
- The First Coast Re II transaction was the first full-fledged 144A-type catastrophe bond to be issued here by Security First, the first Floridian issuer to do so in Asia.
- First, we will refine our regulatory, corporate and tax infrastructure, to enable the structuring of a wide range of ILS, and support innovation in the market;
- We will also develop a vibrant ecosystem of ILS service providers in the Asian time-zone to service Asian risks and clients; and
- Finally, we will continue to promote investor interest in the region.
Speech by Mr Daniel Wang, Executive Director, Monetary Authority of Singapore, at the Connecticut Conference on Climate Change and Insurance on 15 November 2023.
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At the 19th Singapore International Reinsurance Conference, Mr Ravi Menon, Managing Director of MAS, shared three enablers for the reinsurance industry to support Asia’s growth: Enhancing Ex-Ante Risk Mitigation, Addressing Data Gaps, and Unlocking New Insurance Capacity.