MAS sets aside $30m to help insurers build expertise in funding major projects

SINGAPORE – The Monetary Authority of Singapore (MAS) will set aside $30 million to help insurers build expertise in investing in major projects such as power grids and data centres.

The central bank is also proposing changes to the capital insurers must set aside against investment risks, reducing requirements for investments where the risks justify this.

Minister for National Development Chee Hong Tat announced the measures on Nov 2 at the 22nd Singapore International Reinsurance Conference at Sands Expo and Convention Centre.

The event, organised by the Singapore Reinsurers’ Association (SRA), drew more than 4,300 delegates representing 85 countries and territories, according to the association. Reinsurers provide insurance to insurance companies.

Chee, who is also MAS deputy chairman, said insurers could play a bigger role in financing Asia’s growth, alongside protecting businesses and communities against risks.

The $30 million, from the Financial Sector Development Fund, will help defray the costs of building dedicated investment teams, training staff and engaging professional services to establish and expand these investment activities in Singapore.

Across ASEAN, more than US$200 billion (S$256 billion) is needed annually for projects ranging from roads and ports to renewable energy and telecommunications networks, Chee said.

Yet, past studies put such investments at only around 1% to 2% of insurers’ assets, although this share has been growing.

“High-quality infrastructure assets can generate stable, long-term cash flows that align well with insurers’ long-dated liabilities, particularly those of life insurers,” Chee said.

This means income from these projects can help insurers meet payments owed to policyholders years later.

MAS proposes extending lower capital requirements to qualifying debt investments in these projects that have credit ratings, subject to conditions.

Investments with features that reduce risk, such as stable contractual revenues, could qualify for further reductions.

MAS also proposes lower requirements for certain rated investments backed by pools of assets, subject to conditions including repayment priority, ease of trading and structural safeguards.

The public consultation runs from Nov 2 to Dec 18.

Chee said industry players are developing a Singapore-based insurance facility for data centres, with US$200 million in initial capacity. An insurance facility is a pre-arranged agreement where several insurers join their underwriting ability to cover particular types of risks.

Participants include MSIG, Gallagher Re, SCOR, Samsung Re and the Cybersecurity Association Singapore. The facility is expected to cover construction, operational, supply chain, design and cyber risks.

Separately, SRA launched a handbook at the conference to help reinsurers assess risks associated with artificial intelligence.

The guide addresses issues including the reliability of data and AI decisions, dependence on external providers, and how AI affects decisions on insurance coverage and claims.

SRA chairman Glen Riddell said: “AI is creating new opportunities across the insurance value chain, while also introducing new considerations for the risks insurers and reinsurers assume.”

Reinsurers need to understand how AI affects the risks they cover and claims outcomes, he said.

“This handbook provides practical, principles-based guidance to help reinsurers assess these considerations and incorporate them into reinsurance decision-making.”

The conference runs until Nov 5, with discussions covering geopolitical and economic shifts, disaster protection and the skills needed as technology changes the insurance industry.