Parametric solutions on the rise in Asia

Singapore’s reinsurance premium base grew 31 percent to S$27.6bn ($20.9bn) last year, according to Monetary Authority of Singapore (MAS) data, representing around 21 percent of Asia’s overall reinsurance market.

Delivering his keynote speech at this year’s Singapore International Reinsurance Conference, deputy prime minister and MAS chairman Gan Kim Yong set out some of the measures the regulator would be taking to maintain the city-state’s position as Asia’s leading reinsurance hub.

These included efforts to encourage the deployment of parametric solutions from Singapore.

The role parametric solutions can play in the region has been a notable talking point at this year’s event. As Munich Re’s non-life head for Southeast Asia, Michael Hauer, told The Insurer: “Parametric insurance presents significant advantages, such as the swift disbursement of funds to policyholders, which can often streamline the claims process.

“Its clear and straightforward terms rely on measurable data – like rainfall levels and wind speeds – rather than subjective assessments of loss.”

With growing awareness, Hauer says demand for parametric insurance is rising.

“There’s a great opportunity to enhance understanding of its mechanics, particularly regarding triggers and basis risks. However, also the support from governments and regulators will be key in this development.”

Victor Kuk, who heads up P&C reinsurance for Swiss Re in Southeast Asia, India, Korea, Hong Kong and Taiwan, said parametric-based insurance partnerships with the public sector are also becoming more popular.

“They allow governments and policymakers to manage the fiscal impact of a shock, such as a natural or man-made disaster, in a timely manner,” he said.

In today’s edition we highlight several occasions so far in 2024 when parametric solutions have paid out rapidly in the aftermath of a loss event.

The rising focus on parametric coverage is not limited to Asia. Rising global take-up of both parametrics and other forms of alternative risk transfer prompted the launch of our latest sister title, Parametric Insurer, earlier this year.

This serves as a platform for the global parametric and alternative risk transfer community to engage, inform and innovate as the market develops. More details can be found at https://www.parametric-insurer.com/