So we have had a limited supply of insurance coverage, that has itself led to higher cost of protection, which in turn discourages demand for insurance against catastrophe risks. 38. But we can solve this problem. We can overcome the fragmentation of data in Asia, pool data so as to facilitate more efficient underwriting of catastrophe risks. Here too, we have an initiative in Singapore called the Natural Catastrophe Data Analytics Exchange (Nat Cat DAX). •  Nat Cat DAX is a public-private partnership, involving several leading global insurers, the public sector and our research institutes;  •  It is using high resolution data obtained through remote sensing technologies – from satellites, drones and UAVs – and combining that with industry data to much richer database on natural disasters;  •  We welcome more in the industry to join the founding members in this initiative. Cyber insurance 39. The third major, emerging opportunity is in cyber insurance. The good news is that Asia is the most rapidly growing digital market globally. But it also means increasing costs of cyber attacks. This is a global problem, and we face it here in Asia. The frequency, sophistication  BIS central bankers’ speeches  5  and the sheer audacity of cyber-attacks is growing. It will pose huge costs to our economies, and to corporate and personal privacy. 40.
We will be having another round of public consultation at the end of this month on our risk-based capital framework for insurers (or “RBC 2”). The aim is to finalise our proposals for providing capital relief for long-term assets which match the cash flows of the liabilities. We will also be raising questions, as part of this review, on the merit of having a different set of risk charges for infrastructure in particular. Catastrophe insurance 36. The second major opportunity is in catastrophe insurance. The economic cost of natural disasters is growing. It’s certainly growing here in Asia, a consequence partly of economic growth itself, a consequence of urbanisation and the growing concentration of wealth in cities in Asia, and a consequence of a higher incidence of natural disasters. •  Lloyd’s has estimated that even a modest an increase in penetration rates for catastrophe will allow for a large reduction in the economic costs that are being borne by governments and local communities in Asia. 37. So far the take-up of catastrophe insurance in Asia has been woefully low. Part of the reason has to do with a lack of insurance awareness among businesses around the region. But it also has to do with data gaps – the industry needs good data on the frequency, location and economic impact of natural disasters, so that insurers and reinsurers can price risks adequately.