Developing Asia is still growing at double the global average. Rising affluence and a growing middle class will underpin a steady increase in insurance penetration rates that are still well below the global average. Continued industrialisation, expanding cross-border trade, and infrastructure development will drive demand for insurance solutions to mitigate a variety of business risks. Second, Asia is vulnerable. Asia is highly prone to natural catastrophes. •  Asia accounted for 52% of global economic losses from disasters between 2000 and 2009, and 81% in 2011 alone. •  Only about 35% of the economic losses from 2011 were insured, resulting in a heavy economic burden for affected countries. A growing risk awareness, coupled with rising asset values, will lead to greater demand for catastrophe insurance and reinsurance, including alternative risk transfer solutions. Following the 2011 catastrophes, several Asian countries have already established insurance pools for key catastrophe risks. Third, Asia is ageing. Asia is facing a rapidly ageing population. By 2050, Asia and the Pacific will be home to 62% of the world’s elderly population, with one in four persons aged 60 and above. This will lead to greater demand for health insurance, annuity and other retirement security products. BIS central bankers’ speeches  1  As the leading insurance centre in Asia, Singapore is well-placed to serve the burgeoning insurance needs of the region. The insurance industry is one of the brightest stars in the constellation of Singapore’s financial sector. The industry has done remarkably well, but its story is not well known.

The number of global and regional positions in Singapore has grown. Most underwriting decisions can be made on the ground instead of being referred back to headquarters. This has enabled the Singapore market to respond more quickly to clients’ needs. Most Asian risks, including entire large reinsurance programmes and specialty risks, can now be fully placed in Singapore. Towards becoming a global marketplace Our vision is for Singapore’s insurance industry to become a global marketplace by 2020, with the ability to accept not just regional, but global risks. To achieve this, we are pursuing four strategies with clearly laid out initiatives. •  First, to increase supply-side capacity, in both volume and expertise. •  Second, to promote insurance demand, both locally and in the Asia-Pacific. •  Third, to develop a true marketplace, where sellers and buyers come together to negotiate and trade risks. •  Fourth, to foster a conducive business environment. Increase capacity Let me begin with our plans to increase supply-side capacity. 2  BIS central bankers’ speeches  We are focused on increasing the quality and diversity of underwriting expertise here. Having expert underwriters on the ground enables insurers to be more responsive to their clients and make underwriting decisions quickly. They will also have a better understanding of the market environment and underlying risks. Recent events highlight the need to build up a deeper understanding of Asian risks. For example, prior to the devastating floods of 2011, Thailand had not been viewed as catastrophe-prone.