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We all face ‘a new era of risk and fragility’, says Tan
The outlook remains positive because Asia will continue to urbanise at a pace that is faster in Asia than in many other locations: Singapore minister Tan.
Delegates at the 18th Singapore International Reinsurance Conference (SIRC) were told we all face “a new era of risk and fragility” just as we are trying to build back from rising claims and challenges arising from COVID-19.
That was a key message from Alvin Tan, Minister of State, Ministry of Trade and Industry and Ministry of Culture, Community and Youth, Government of the Republic of Singapore, in the event’s opening keynote speech.
As he welcomed delegates, he stressed that it had not always been certain that SIRC would take place as a physical event this year as the world was being affected by a “polycrisis”—a multitude of crises now converging together.
He mentioned the Russian/Ukraine war, which has resulted in food, commodity and energy shortages, and that soaring inflation, higher for longer, may push several economies into recession.
“Nat cat continues to increase in both frequency and severity, with events such as Hurricane Ian, the Pakistan floods or the fires in Europe causing unpresented catastrophic and economic challenges and damage and challenging current modelling assumptions.
“The overall impact of these developments on the reinsurance industry has so far been mixed.”
Tan said this was because in the first half of 2022, the global reinsurance industry estimated $7.34 billion in collective losses and reserve charges for the Russia/Ukraine war alone.
“Asia is consuming and producing more.”
Alvin Tan, Singapore Government
He said that high inflation is impacting health, motor and liability insurers. “They are all facing higher claims that impact their profitability after COVID-19 losses and elevated catastrophe losses.”
Central banks are combating the effect of inflation and high interest rates which, he said, would result in additional interest income for the investment of insurers, which will help insurers profitability in the mid term.
But, he said, it should be remembered that insurers were challenged to generate sufficient return to meet their liabilities in the low interest rate environment, which is a thing of the past at least in the near to medium term.
The outlook in Asia remains positive because Asia will continue to urbanise at a pace that is faster in Asia than in many other locations of the world, he added. Asia’s middle class is growing, and Asia is consuming and producing more.
In 2025, gross written premiums for life and non-life insurance are expected to grow to SNG$60 billion and $20 billion respectively, as a result. So more lives, more wealth and assets will need more protection.
Marc Haushofer, chair of the Singapore Reinsurers’ Association, welcomed delegates and said that this was the first time since 2011 that the event had sold out all its meeting rooms, tables and exhibition desks a month before the event, as well as having 2,250 registered delegates in attendance.
“There is a strong demand for SIRC and it is a must on the calendars for reinsurers focused on the Asian market,” he said.
Main image: Shutterstock / Asianet-Pakistan
