The Lion City Roars

In this article, we look at the development and current state of the (re)insurance market in Singapore.

Singapore has firmly established itself as the reinsurance hub in the Asia-Pacific region. At the end of last year, two more reinsurers entered the market, bringing the number of reinsurers operating in Singapore to 26.

Gross premiums of reinsurance Offshore Insurance Fund ("OIF") business have grown from under S$1.5 billion (US$1.07 billion) in 2000 to around S$2.5 billion (US$1.8 billion). Singapore (Domestic) Insurance Fund business premiums have remained fairly static at around S$250-S$280 million during this period. Over half of the gross premium is generated from property risks, but there has been growth in recent years in hull and liability business, particularly since 2008 when gross premiums jumped by over 50 per cent from 2007 levels to around S$220 million.

Most OIF reinsurance business entering the Singapore reinsurance market comes from China. Gross reinsurance premiums for China business have grown from S$40 million in 2004 to over S$420 million in 2008. Gross premiums from India, Pakistan and Sri Lanka have doubled in the same timeframe, from S$96 million to over S$190 million. The amount of gross premium from established insurance markets such as Korea, Japan and Indonesia has remained relatively stable since 2005, staying at around S$200-S$280.

Lloyd's

Not surprisingly, Lloyd's has been at the forefront of the development of the reinsurance market in Singapore. Lloyd's Asia was set up in 1999 and, over the past few years, has grown exponentially. There were only three syndicates in 2005; now there are 15, with Atrium Insurance Agency (Asia) and Argenta Underwriting Asia being the latest additions. Hardy has recently announced that it too plans to set up in Singapore. Not only does this mean that Lloyd's is providing more capacity from Singapore to the Asia market, it is also offering cover for specialist risks which was previously unavailable.

Market Conditions

The recent flood of reinsurers into the market has increased capacity and caused concern regarding rates. That said, the increased capacity in Singapore means there is no longer a need to go to the London Market for lead...