Presence of Foreign Insurers Uplifting Singapore Reinsurance Sector

Ken research announced its recent publication on “Reinsurance in Singapore, Key Trends and Opportunities to 2020” .The report provides a comprehensive analysis on the reinsurance market of Singapore. It delineates about the competitive landscape in the country, gives a thorough overview of the Singaporean economy and demographic. It further provides detailed analysis of natural hazards and their impact on the Singaporean insurance industry.

The strength of this economy lies in its stable political and sound economic system. The nation is known for its excellent business environment and banking sector. Singapore has emerged as a high income country that is major trading regional and global hub for financial and trading services. Thus, this nation has become one of the very few nation ,which has current account surplus, ample foreign reserves and very low public external debt. However, on the other hand Singapore is highly dependent on exports, has a quite volatile.

Singapore has the most open insurance sector in the world and is fully open to foreign insurers. The MAS (monetary authority of Singapore) regulate the insurance market. This industry is currently in its boom phase as the investment and returns have been growing leaps and bounds. The introduction of FAIR ( Financial Advisory Industry Review) which has brought more transparency in production and sales. The MAS has also recommended direct purchasing of the insurance product to combat rising operating cost and help to attract and retain talent. This move has drawn some flak from people citing that the nation is not ready for such a thing as yet but many insurance companies has supported this thought. The insurers are licensed and governed under the Insurance Act (Cap. 142) (“IA”). Insurers can carry their business in Singapore as licensed insurers or foreign insurers. Licensed insurers can carry on direct life and/or general business, life and/or general reinsurance business or captive insurance. Foreign insurers operate in Singapore under a foreign insurer scheme established under Part IIA of the act There are two foreign insurer designs- The Lloyd’s Scheme and the Lloyd’s Asia Scheme.

Singapore is known as the reinsurance hub. Among the top 25 reinsurance companies in the world, 16 have their regional hub Singapore . with the increase in the natural catastrophes around the Asia- pacific region and Oceania, are forcing the insurance companies to share their revenues with the reinsurance companies. This has emerged as one the major reasons for the increase in the business in the reinsurance companies situated in Singapore. The multinational companies rule this market.

Authorized reinsurers and Approved Marine, Aviation and Transit (“MAT”) insurers do not need to have a physical presence in Singapore. Such reinsurers can carry on the business of providing the reinsurance of liabilities under insurance policies in Singapore. They further may be authorised as general reinsurers and/or life reinsurers. MAT insurers do not write insurance business, other than the collection or receipt of premiums in relation to MAT insurance business.

Author: Dylan Jones

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