But we assessed that maintaining capital buffers to cushion against potential losses was relevant to insurance companies as it was to banks. So, we proceeded to put in place capital requirements for insurers operating in Singapore, even when most other jurisdictions did not. At the same time, we were conscious of the need to apply the capital framework in a manner commensurate with the risks posed by different types of insurance activities. •  For example, Lloyd’s Asia syndicates are not subject to the RBC framework. This is because the Lloyd’s market is approved and regulated by the UK regulator, and premiums are booked in the UK and protected by Lloyd’s central fund. •  Likewise, captives and marine mutuals are not subject to RBC. They are restricted to writing business principally for their parent and related corporations, and of their own members respectively. The risk they pose to the broader financial system is low. Complementing regulation with supervision Close, and if necessary intrusive, supervision of financial institutions is an important complement to industry-wide regulation. Frequent and in-depth monitoring of the institutions we supervise helps us calibrate our supervisory approach to the particular circumstances of each institution. An important aspect of supervision is surveillance, which seeks to identify and assess risks and vulnerabilities that may affect the financial system, including insurance companies. A critical component of surveillance is stress testing. •  Since 2005, MAS has been conducting annual stress tests to assess the insurance industry’s preparedness against both macroeconomic stress scenarios and more insurance-specific scenarios.

•  Five of the top 10 primary growth markets will be in the Asia-Pacific; this includes China, India, and Indonesia. There are three structural factors driving demand for insurance in Emerging Asia. First, Asia is getting richer. Projections by the IMF show that Emerging Asia will remain the fastest growing region in the world over the next decade. As incomes rise in Asia, governments, corporates, and individuals will increasingly seek insurance to protect their growing economic assets. •  Burgeoning urbanisation, infrastructure development, and cross-border trade will drive demand for commercial and specialty insurance. •  A growing middle class and rising affluence will underpin a steady increase in life and health insurance penetration rates. Second, Asia is getting older. Asia is facing declining fertility rates, increasing life expectancy, and a rapidly ageing population. •  The United Nations projects that, by 2030, Asia’s old age dependency ratio will be 16%, up from today’s 11%. •  Against this demographic backdrop, public retirement and pension systems in Asia remain inadequate. The retirement gap between savings and retirement needs can be as high as 13 years. •  This will spur greater demand for private health insurance, annuity and other retirement security products. Third, Asia is becoming more aware of catastrophic risk. •  Over the last 30 years, Asia has borne the brunt of natural catastrophe losses, accounting for almost half of the world’s estimated economic losses from natural disasters. Yet less than 5% of the losses were insured, compared to 40% in advanced economies.