At the frontier of development, the evolution of Big Data and Insurtech has opened up significant new possibilities for segmenting and pooling of risk and capital, and tailoring solutions to specific needs and profiles. Online platforms based on the group captive model and P2P insurance concepts are a case in point. Given that captives aim to provide specialised coverage that is not typically available in the traditional market, it is only natural for captives to operate in this space. Third, we are likely to see greater traction in efforts to understand captives from a regulatory and supervisory perspective. At a global level, there is a greater appreciation of the role and importance of captive insurers, including by the International Association of Insurance Supervisors (IAIS). IAIS published two papers in 2006 and 2015, addressing the economic benefits of captive insurance and its relationship to traditional insurance and reinsurance markets. More significantly, it recognizes the importance of applying a supervisory regime that has due regard to the specific nature, scale and complexity of various forms of captives. A primary objective of regulation for captives is promoting financial stability. In this respect, regulators will continue to be concerned with risks that may be created as a result of arbitrage and distortions to the broader insurance market. Captives have an important contribution to offer. However, understanding risks relating to captives at a much deeper level, will be important to deliver regulatory outcomes that are proportionate and economically efficient.
Given what we have experienced in the last two years, it is my hope that the international community will see the wisdom of not waiting for the next crisis to learn how we can make the international financial system a more robust and safe one for all of us.” 3. Ladies and Gentlemen, I made the above remarks over 10 years ago, in June 1999. It was ten months after the Asian Financial Crisis hit Hong Kong, which was then followed by the turbulence of the global financial system as a result of the abrupt collapse of the LTCM. It was rather unfortunate that the fear I expressed in 1999 has come true ten years later. The international community has failed to learn the lessons from the Asian Financial Crisis and the LTCM debacle and to make the financial system more robust and safer. As a result, we have been punished, and punished very, very severely. The latest Financial Tsunami, dubbed as “Once in a Century”, has demonstrated that somehow all the key safety valves and gatekeepers have failed functioning properly to prevent excessive leverage and risktaking within the financial system, leading to very heavy fiscal and social costs in the subsequent bail-outs. 4. Now the international community, led by G20, is trying very hard to draw lessons from this latest financial crisis. I sense that there is a very strong resolve to do something this time round.