Singapore regulator offers grants to kick-start the market

The Monetary Authority of Singapore (MAS), the combined central bank and insurance regulatory authority, has for many years stated its long term objective of becoming both Asia's leading insurance hub and a global insurance marketplace. And 2018 will see Singapore take the next step in the implementation of its plan, establishing itself as a viable marketplace for the creation of catastrophe bonds.

No catastrophe bond has ever been issued out of Singapore and jurisdictions such as Bermuda continue to dominate what is one of the fastest growing parts of the global insurance industry. The MAS aims to address this gap in its insurance offering and kick-start the development of the city-state’s insurance linked securities (ILS) market by offering to fund 100% of the upfront costs incurred in issuing catastrophe bonds out of Singapore through a grant that will be available from the beginning of 2018 and which will apply in respect of ILS bonds covering a wide range of risks. MAS has also established an alternative risk transfer working group comprising industry experts in the ILS space aimed at exploring additional initiatives that may facilitate the establishment of an ILS market place.

This grant scheme, coupled with the commitment by the MAS to regulatory flexibility, will see the first Singapore catastrophe bond issued in 2018 and the emergence of a new ILS marketplace that will provide competition for those jurisdictions that currently lead the way in ILS offerings.