MAS developing market for insurance-linked securities

Singapore can contribute to sustainable growth in Asia by helping to strengthen the region's resilience to natural disasters, said Acting Prime Minister Heng Swee Keat yesterday.

To this end, the Monetary Authority of Singapore (MAS) is developing the market for insurance-linked securities as an alternative risk financing solution, he said. These can help provide financing quickly in the wake of regional disasters or catastrophic losses.

Mr Heng, who is Deputy Prime Minister and Finance Minister, said only about 5 per cent of economic losses in developing Asia are currently insured, despite the fact that natural catastrophes have increased in intensity and frequency due to climate change.

"This puts tremendous strain on governments of developing nations in the event of a natural catastrophe, which can set back economic progress in the affected areas for years to come," he added.

He was speaking at the Official Monetary and Financial Institutions Forum's Global Public Investor report launch.

Global public investors are central banks, sovereign funds and public pension funds that impact global markets. The report gives insights into their performance and practices.

To develop the market for insurance-linked securities, MAS has set up a Natural Catastrophe Data Analytics Exchange, Mr Heng said. This initiative supports the structuring, modelling and securitisation of such transactions by raising data quality and promoting standardisation.

It has introduced a grant scheme to defray the costs of issuing catastrophe bonds here, with the first such bond issued out of Singapore this year.

Mr Heng outlined two more ways Singapore can contribute to Asia's sustainable growth.

Its Infrastructure Asia initiative can be a conduit for institutions to invest in infrastructure development opportunities here, he said. Singapore is also growing its sustainable finance sector, with the MAS seeking to nurture the growth of green, social and sustainability bonds, among its efforts. - THE STRAITS TIMES