Harnessing risk advisory expertise to provide advice and design risk financing solutions. These building blocks will enable ASEAN members to better understand their needs and design appropriate disaster risk financing programs including through transferring risk to capital markets. b. Governments are increasingly using alternative risk transfer mechanisms such as government pools, like the Philippines parametric disaster insurance pilot, the Thai crop 2/4  BIS central bankers' speeches  insurance scheme and the Vietnam pilot agriculture programme. In May this year, the establishment of the Southeast Asia Disaster Risk Insurance Facility (SEADRIF) in Singapore was officially announced. As ASEAN’s first regional catastrophe risk facility, SEADRIF will start by establishing a regional catastrophe pool to insure the flood risks of Lao and Myanmar. SEADRIF will also seek to sponsor different risk management strategies, including issuance of catastrophe bonds, or to act as a reinsurer to national catastrophe pools, to further strengthen the region’s financial resilience to disaster risks. Supporting ILS growth in Asia through Singapore 11 The presence of a full-fledged ILS market and ecosystem in the region will encourage the development of this risk financing instrument. However, there is currently no established market in Asia for ILS. 12 As the leading financial centre in Asia, Singapore is well positioned to fill this need: a. We are a well-established regional insurance hub that offers a comprehensive spectrum of re/insurance activities through a vibrant ecosystem of re/insurance players and service providers.
The aim of the scheme is to defray the frictional costs of catastrophe bonds issuances. We have received keen interest from the region, with a healthy pipeline of issuers keen to tap on the grant scheme to issue a catastrophe bond here. Leading insurance brokers have expressed support for Singapore as a domicile and are working with their Asian clients for potential issuances here. b. We have also formed an industry-led Alternative Risk Transfer work-group to advise MAS on initiatives to support the development of Singapore as an ILS domicile. The workgroup will continue to provide feedback on the current ILS regime including on 3/4  BIS central bankers' speeches  regulations, tax and structures. 15 Fourth, our proximity to Asian markets allows for a deep understanding of underlying risks and needs of the sponsors. We have grown as a traditional re/insurance market due to this and it will likewise be an important consideration for Asian ILS issuers looking to tap capital markets in the region, and for capital providers that are underwriting the risks. 16 Despite this promising outlook, we recognise that ILS expertise is still nascent in Asia, and there is much scope for Singapore to learn from international best practices. We hope to strengthen Singapore’s proposition as a ILS domicile in 4 ways: a. First, we seek to explore the introduction of bespoke corporate structures for the ILS market, like the Protected Cell Company (PCC) structure, to provide more structuring options to potential issuers.