In order to quickly provide funds in the aftermath of regional catastrophes, Singapore is working to develop alternative risk transfer mechanisms such as insurance-linked securities (ILS) and government pools.
As a result, the Monetary Authority of Singapore (
MAS) will initially fund the entirety of the upfront costs involved in issuing catastrophe bonds. These are assets that pay insurers in case they incur catastrophic losses.
This was announced by Lim Hng Kiang, Minister for Trade and Industry and deputy chairman of MAS, at the 14th Singapore International Reinsurance Conference, reports Straits Times. Lim added that the grant will begin on January 1, and all ILS bonds covering all forms of risks beyond natural catastrophes will be eligible.
“It is my hope that this grant scheme will encourage insurers and reinsurers to consider issuing a catastrophe bond here,” said Lim. “In fact, MAS is already working with key industry players such as
IAG Re Singapore with a view to issuing a catastrophe bond in Singapore.”
An alternative risk transfer workgroup has been formed to assist the MAS in this endeavour. It is chaired by Jon Paradine of Renaissance Re and will provide advice to the MAS on how to develop Singapore as an ILS hub in Asia as well as globally.
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