SIRC: The Role of Reinsurance in Driving Sustainable Growth in Asia – Mr Gan Kim Yong

At the 20th Singapore International Reinsurance Conference (SIRC), Mr Gan Kim Yong, Singapore’s Deputy Prime Minister, Minister for Trade and Industry, and Chairman of the Monetary Authority of Singapore, highlighted the essential role of reinsurance in fostering sustainable growth across Asia.

Here’s an excerpt of his keynote address which underscored how reinsurance supports the region’s development by providing risk management solutions that enable growth amidst key transitions in climate, energy, digital, and demographic landscapes.

1. Climate Transition: Addressing Increasing Environmental Risks

Asia faces escalating climate risks, with severe weather events becoming more frequent and intense. The reinsurance industry’s expertise in natural catastrophe coverage places it at the forefront of efforts to close Asia’s protection gap, particularly in vulnerable regions.

For instance, the recent rise in insured losses due to natural disasters highlights the urgent need for enhanced risk models and data to prepare for even more severe losses. In 2023 alone, the Asia-Pacific region faced $65 billion in economic losses, yet 91% of these were uninsured—a stark contrast to the 30% gap seen in the United States.

By partnering with governments and research institutions, reinsurers are adapting models and products to protect against climate-related losses, ultimately helping Asia navigate the path toward sustainable resilience.

2. Energy Transition: Supporting the Move to Renewables

As Asia transitions to renewable energy, reinsurance plays a critical role in supporting the growth of sustainable infrastructure.

Asia’s energy needs are on the rise, yet most of its current supply comes from fossil fuels. To meet sustainability goals, the region is scaling up renewable energy projects like solar, wind, and hydropower.

Estimates suggest that renewable energy investment in Asia-Pacific could double to $1.3 trillion by 2030. Reinsurers are uniquely positioned to help bridge this gap by offering solutions to mitigate risks specific to renewable projects, such as heavy weather-related damage.

New insurance models and frameworks are emerging to support these infrastructure developments, reinforcing the financial viability and resilience of Asia’s renewable energy sector.

3. Digital Transition: Managing Cyber Risks in a Growing Digital Economy

Asia’s digital economy is projected to surpass $2 trillion by 2030, driven by the rise of e-commerce, digital payments, and advanced technologies like AI and cloud services.

However, this digital expansion also increases exposure to cyber risks, making cyber insurance more crucial than ever. In response, reinsurers are developing sophisticated risk models to assess cyber threats, such as ransomware and data breaches.

Innovations in dynamic cyber risk underwriting now allow real-time assessments to keep pace with evolving threats. By helping companies fortify their cybersecurity posture, the reinsurance industry is addressing one of the most pressing challenges of Asia’s digital age.

4. Demographic Transition: Preparing for Aging Populations and Growing Middle Class

Demographic shifts across Asia, including aging populations and a burgeoning middle class, are creating increased demand for life and health insurance products. As countries like Japan, China, and South Korea experience rapid aging, the financial burden of healthcare and pensions rises.

Reinsurance companies share the risks associated with longer life expectancies and greater healthcare needs, helping insurers address these demographic changes. Additionally, urbanization and wealth accumulation are driving demand for financial security products, creating further opportunities for reinsurance to manage the growing complexity of life and health liabilities in Asia.

Singapore’s Role as Asia’s Reinsurance Hub

Singapore has established itself as a leading reinsurance hub, with a strong network of global insurers and reinsurers. As of today, Singapore serves as the Asia-Pacific hub for 12 top global insurers and reinsurers, and among reinsurers alone, 16 of the top 25 reinsurers in the world have made Singapore their regional hub, covering not just ASEAN, but also markets in North and South Asia and even Australia.

Singapore’s focus on advancing AI capabilities and alternative risk transfer markets further strengthens its position as the go-to center for reinsurance expertise. These efforts align with the Monetary Authority of Singapore’s initiatives to deepen the industry’s capabilities, enabling Singapore to support Asia’s growing demand for innovative reinsurance solutions.

Mr. Gan’s address underscored the reinsurance industry’s unique position to support sustainable development across Asia’s climate, energy, digital, and demographic shifts. As the region navigates these fundamental transitions, the reinsurance sector will play an increasingly critical role in building a dynamic and resilient future for Asia.

Read his full speech here.

The SIRC is organized by the Singapore Reinsurers’ Association. Picture credit: SRA