Central bank head opens Allianz Asia hub with call for Singapore to deepen its underwriting expertise
A large regional office in Singapore’s Marina Bay financial district will soon be the new home for 11 Allianz entities.
The Allianz Asia hub occupies almost 80,000sq ft of office space spread over three floors of Asia Square Tower 2. It will accommodate more than 500 employees.
Allianz divisions that will be moving to the hub in November include Global Assistance, Global Corporate and Specialty, Global Reinsurance, Global Investors, Capital Partners, Real Estate, Managed Operations and Services, and Global Automotive Business.
The member of the Allianz SE board of management responsible for insurance growth markets, Manuel Bauer, said it was beneficial to the company to be based in one of Asia’s most vibrant and robust economies. “Singapore’s financial district gives us the advantage of being in the centre of Asia’s financial hub and international business centre,” he said.
Speaking at the hub’s unveiling ceremony yesterday (pictured), the managing director of the Monetary Authority of Singapore (MAS) Ravi Menon said that Asia Square was “shaping up to be Singapore’s own version of London’s Leadenhall Street, where many prominent insurers and brokers are located”.
“Such physical co-location will help to promote greater exchange of ideas and collaboration, and create an insurance marketplace that is committed to deliver customised and innovative solutions,” he said.
The head of Singapore’s central bank went on to compare the development of Allianz as a company to that of Singapore’s specialist insurance market. “Just 10 years ago, the insurance industry in Singapore was focused on writing pure domestic risks,” he said. “Singapore has now developed the capacity and expertise to underwrite large and complex risks across Asia.”
Menon predicted that a growing middle class and rising affluence would underpin a steady increase in insurance penetration rates in Asia. “Over the next decade, insurance business in Asia is projected to grow at about 8% per annum,” he said. “By 2020, Asia is likely to account for almost 40% of the global market.” He added that continued industrialisation, growing trade activities, and infrastructure development would mean greater demand for insurance solutions to mitigate a variety of risks.
“It is vital that insurers seeking to expand in Asia have a deep understanding of Asia’s risk landscape,” he said. “Aggregate exposures have grown steadily in Asia, due to rapid urbanisation and economic growth over the last two decades. Asia’s strong record of development means that we have more to lose from unforeseen calamities.”
Menon, who was the permanent secretary at the Ministry of Trade and Industry and deputy secretary at the Ministry of Finance before being appointed managing director of MAS in 2011, added that events such as the Tohoku earthquake and tsunami, Thai floods and New Zealand earthquake acted as reminders to the industry to constantly stay ahead of the risk management curve.
Menon said that Singapore must deepen its underwriting expertise in reinsurance and specialty insurance with an Asian focus. He said that the global insurance industry continued to face pressure from weak economic growth, soft pricing and persistently low investment yields.
“Insurers can no longer rely on investment income or rate increases alone to compensate for weak underwriting,” he said. “Likewise, even as Singapore’s insurance industry diversifies the span of its activities to include capital markets, it must continue to stay focused on core competencies in underwriting insurance risks. High underwriting standards are critical for sustainable growth.”
In seeking to strengthen its value proposition as a specialist insurance market with an appreciation of Asia’s risks, Singapore’s insurance industry must invest in Asia-focused data, research and analytics, Menon advised. “Singapore has achieved a good head-start in a number of areas, such as SMU’s Centre for Silver Security for longevity risk and NTU’s Institute for Catastrophe Risk Management for catastrophic risks,” he said. He added that Singapore’s insurance market should continue to be underpinned by a strong partnership between industry, academia and government. “Research, talent development and market infrastructure are areas where active collaboration is a critical success factor,” he said.