Prof. Yoshihiro Kawai, Chairman Global Asia Insurance Partnership

Mr. Lee Yuan Siong, Chairman Geneva Association

Industry Partners,

Distinguished guests,

Ladies and gentlemen,
 
Introduction

1.  Good morning, everyone. It is my privilege to address you as we conclude the Global Asia Insurance Partnership (GAIP) Summit and open Geneva Association’s Programme on Regulation and Supervision Seminar (PROGRES Seminar), which is held in Singapore for the first time. Together, GAIP and Geneva Association have contributed to a myriad of global efforts to strengthen risk resilience, to close protection gaps, and to promote inclusive insurance.

2.  GAIP has led efforts globally to address insurance development needs and to build Asia’s risk resilience. Geneva Association continues to shape global conversations through your extensive and rigorous research and stakeholder engagement. Your member companies collectively manage about USD 21 trillion in assets and PROTECT 2.6 billion people globally.

3.  Protect – that I believe is the mission of GAIP, Geneva Association, and every one of us here in this room today. And so, I have structured my speech into how we can collectively protect our people against three emerging trends and threats we see in the world today. First, to protect against the demographics of ageing. Second, to protect against the deleterious effects of climate change. Third, to protect against macroeconomic shifts in the global world order as a result of a more fragmented world precipitated by the US tariffs.

Ageing demographics

4.  As many of you know, Asia is ageing faster than many other parts of the world. In Asia, the proportion of people aged 65 years and above is expected to almost double (2X) in the next 25 years, because people live longer and birth rates decline. Singapore will be a super-aged society in the next two years, where one out of four will be aged 65 and above. Two potential reasons are medical advancements and better living conditions. In Europe and the Americas, that increase is about half (0.5X) over the same time period.[1]

5.  This demographic shift will significantly impact retirement, healthcare, and social protection in Asia. What does this mean for individuals like you and I? Living longer means we will consume more financial resources over the course of our lifetime. Higher inflation could erode savings, and market volatility could erode investment portfolios just as retirees need to draw on them. In Singapore, we are doing quite a bit. One of my projects in the Ministry of National Development is on the Health District @ Queenstown. We are supported by an international advisory panel comprising experts from Columbia University Mailman School of Public Health, University of Tokyo, Harvard Center for Population and Development Studies, Stanford University and others, who are keen to find out how Singapore became a Blue Zone. We are implementing some testbeds in Queenstown, to see how we can promote active ageing, with control groups to assess outcomes as we transition to a super-aged society. Some of these interventions include healthy living, ageing well, ageing-in-place, and building a community for our seniors to be more active alongside other generations.

6.  What does it then mean for the broader economy? As many of you know, ageing populations can lead to reduced consumption and investment, declining tax revenues, and escalating healthcare and social security costs. This is quite stark in Singapore. Our government operating expenditure on social development, including on healthcare, has increased 10X, from around SGD 5 billion in 1997 to SGD 50 billion in 2024.[2] That is a tenfold increase in government social spending, including healthcare, resulting from longer lifespans, advancements in medicine, and demand for better healthcare treatments that are available in the market.

7.  With these challenges, what can we do? How can insurance help us bear some of this burden, and going into the theme of the keynote, how can we then protect our people? With comprehensive insurance coverage, individuals can receive financial support for their extended care needs and have less to worry about as they age in their golden years. With early planning and effective risk pooling, retirees should not need to fear that unexpected illness or injury will deplete their retirement savings.

8.  In Singapore, we have progressively strengthened our social support schemes and services to meet the evolving needs of our ageing population. To better support our seniors and ageing population, we have gone upstream and started preventive efforts such as Age Well SG. This includes expanding our network of Active Ageing Centres that provide a wide range of activities and programmes for our seniors. In addition to being a Minister of State, I am also a member of Parliament, looking after the needs of my constituents. In running the ground and meeting with seniors in their homes and around the area, we understand their needs and have built Active Ageing Centres very close to them. We have also tried to create programmes and facilities, including barrier-free access, to allow seniors to age well in place. Healthier SG is another capitation model that allows Singaporeans to reduce wait time for polyclinic visits. These upstream interventions and programmes help our seniors to age-in-place, keep them active, and combat loneliness, which can be a major social determinant of poor health.

9.  For those with greater care needs, we recently enhanced CareShield Life, our national long-term care insurance scheme, to support affordability and sustainability of long-term care. We recently increased monthly cash payouts under CareShield Life to help policyholders with severe disability better manage their larger costs of long-term care. We will also provide transitional premium support to cushion any resulting increase in premiums.

10.  But even though I’m speaking about ageing and lifespans, we ought to celebrate living longer, rather than fear it. Today, there is increasing emphasis on staying healthy and active in our senior years, so we can continue to contribute to society and spend quality time with our friends and family. In our neighbourhoods, I observed a trend that seniors are increasingly involved in sports, and we are trying to build more facilities. Some seniors can be incredibly competitive when it comes to sports like paddleball or pickleball! We also see some insurers encouraging healthy habits among policyholders to help them manage health risks. If we do this well, our Silver Generation can offer many opportunities for our insurance industry to unlock and create new products and services that address health-related risks and long-term financial security. Insurers can also help address traditional barriers to insurance adoption among seniors. This includes simplifying onboarding processes, partnering ecosystem players to bundle or embed products and services, and streamlining claims procedures. This concludes my first point, that we can better protect our people from the effects of ageing.

Climate change

11.  The second trend I want to talk about is the threat of climate change. Here too, Asia faces some unique challenges. According to the World Meteorological Organization (WMO), Asia is warming nearly twice (2X) as fast as the global average. Asia is ageing faster, and also warming faster. In fact, for many of you who live in Asia, 2024 was one of the warmest years on record for many countries in our region. You would have experienced or known about extreme weather events, including major flooding in parts of Southeast Asia, and over 25 tropical cyclones over the Pacific Ocean and South China Sea.[3]

12.  Why is this important, and why is this a challenge? Because there are substantial protection gaps for natural hazards. According to the OECD, natural hazards caused annual average losses of around USD 50 billion across emerging and developing Asia Pacific countries between 2000 and 2023, and over 85% of these were uninsured in 2023.[4] There is a huge gap in this. The intensifying frequency and severity of climate-related disasters across Asia can amplify these protection gaps and threaten the fiscal stability and community resilience of the population we are charged to protect. Without adequate protection, we will have to divert more public resources to disaster recovery, and because resources are finite, that means there will be less to devote to more important and pressing issues and long-term development priorities.

13.  Insurance thus plays a critical and central role towards climate adaptation, both in prevention and restoration. Pre-disaster, it can incentivise policyholders to reduce their climate exposure. Post-disaster, insurance facilitates faster recovery and reconstruction, with reduced reliance on emergency aid.

14.  Some countries in Asia Pacific are already taking steps to improve access to and awareness of insurance products. Thailand, for example, has implemented a partnership model for crop insurance, combining government subsidies with coordinated efforts across ministries, insurers and farmers to help farmers manage natural disaster risks. The Philippines has created a catastrophe insurance facility for insurers to pool resources and expand the range of available products, strengthening the industry and raising insurance penetration.

15.  And there has been progress made in piloting and scaling innovative projects through collective effort and international collaboration.

16.  GAIP’s inland flood risk model is a good example. Working with Nanyang Technological University’s Insurance Risk and Finance Research Centre, GAIP introduced a geo-hierarchical deep-learning framework, designed for data scarce regions. What does this framework do? It offers a robust and scalable alternative to traditional flood models, which often rely on highly granular and detailed local datasets that might not be readily available in many parts of our region. This makes this model particularly valuable in contexts where it is difficult to predict inland flood risks due to limited data infrastructure. I understand GAIP is working with partners to incorporate this model within their risk modelling arsenal.

17.  Another example is Geneva Association’s insurability readiness framework, which represents a significant advancement in assessing and managing risks associated with emerging climate technologies. By working with insurers at the pre-commercialisation stage, this framework enables improved data transparency, co-developed risk management strategies, and insurance solutions that are customised and tailored to each form of technology. What do these efforts do? They enhance the insurability of projects, unlock access to financing and shorten due diligence timelines, enabling many of these promising climate innovations to achieve and reach meaningful scale.

18.  Policymakers can also play a role in protecting our people from climate change. In fact, our colleagues in MAS are updating regulatory and supervisory approaches to set clear risk management standards, even as insurers like yourselves continue to undertake investments in infrastructure assets, including those which facilitate climate transition.

19.  MAS will be introducing a differentiated capital treatment for qualifying infrastructure projects, to facilitate insurers' investments in this area. We will also pilot a time-bound project to accord differentiated capital treatment for green infrastructure investments by insurers. Where the investments do not fully meet the proposed infrastructure qualifying criteria, they will be subject to additional risk-proportionate guardrails.

20.  But it is not enough for only companies and regulators to take action. To further address the challenges and protection gaps mentioned earlier, we will need more coordinated initiatives and lean into innovation and technology.

21.  An example is Southeast Asia Disaster Risk and Insurance Facility (SEADRIF) – which Professor Yoshihiro Kawai chairs. SEADRIF helps ASEAN member countries strengthen climate and disaster resilience. It does so by facilitating knowledge sharing and exchange of experiences in disaster risk financing, broadens risk pooling to more member countries, improves access to international financial markets, and crowds in support from multilateral development banks.

22.  SEADRIF recently introduced a multi-year, multi-peril parametric policy featuring a new trigger based on government-reported disaster impact data. This is an enhancement in the design of sovereign parametric insurance. Rather than using complex hazard models, the policy triggers payouts based on the annual number of people affected by disasters, as formally reported by the relevant national disaster management authority. Once pre-agreed thresholds are crossed, payouts are made within 10 business days. How effective is this? Well, earlier this month a US$ 2 million payout was made to the Ministry of Finance of Lao PDR just six business days after official data confirmed that over 300,000 people were affected by multiple disaster events. So, that is technology and framework protecting people’s lives in practice. This innovation is especially relevant in our region as it provides protection against floods, which are currently not well covered due to data limitations in many parts of our region.

23.  Despite its promising benefits, parametric insurance adoption remains limited in Asia. Why? There could be a few reasons, such as low market awareness, nascent track records, data and infrastructure constraints, and differing regulatory views due to parametric insurance’s non-indemnity nature. GAIP is studying what to do and how to work through these impediments, and we look forward to seeing how your insights can help us chart the way forward. This concludes my second point about how we can and must protect people against the deleterious effects of climate change.

Tariffs and macroeconomic uncertainties

24.  My third and final point is how we can protect people against the new world order we are seeing with the rise of tariffs and protectionism, and the retreat of rules-based global multilateral order. As many of you know, the US tariffs will change the face of global trade for years to come. While global growth has been resilient thus far, we expect momentum to slow. In Asia, growth in the first half of this year was largely above expectations. But this was due to front-loading of exports ahead of anticipated tariffs and AI-related investments. This boost to growth from front-loading may dissipate as the previously delayed tariffs come into effect. Underlying demand is also softening due to continued trade policy uncertainties, as potential sectoral tariffs such as those in the pharmaceutical or semiconductor sectors weigh on people’s and businesses’ minds and affect investment. We thus expect global growth to moderate in the months ahead.

25.  Tariffs will significantly impact Asia, given our region’s high dependence on trade. As you know, Singapore is a trade-dependent nation. Intra-Asia trade links are thick and tightly inter-woven because of our cross-border production networks. Therefore, persistent trade frictions may and are likely to disrupt these supply chains, and lead to higher inflation and credit risks. Excessive interest rates and asset price volatility will also affect asset and liability management.

26.  Hedging costs will also rise in tandem with these tariffs and hit Asia significantly. Because the limited availability of long-dated assets to match liabilities has driven insurers to seek suitable assets in other markets with deeper supply, exposing them to foreign exchange risks. Less efficient supply chains will also result unfortunately in higher medical costs, and policyholders will face higher premiums or lower benefits.

27.  What can we do to protect our people against these risks?

28.  We can do a lot – businesses, financial sector, insurers, and government. My team and I at MTI have been travelling to South Africa, the United States, China and many other parts of the world, to build and strengthen trade links across Europe, within Asia, Latin America and Africa. We must build momentum. We must rebuild optimism and strengthen the multilateral trading system that has underpinned decades of growth. We must continue to commit to free trade in goods and services and open markets, which will help financial institutions and insurers remain competitive and engage in healthy competition.

Conclusion

29.  Ladies and Gentlemen, as I conclude, I return to GAIP and Geneva Association’s mission. And the mission of all of us present in this room. That is, to protect people. GAIP and Geneva Association are catalysts and convenors. You bring together industry, regulators, and academia to come up with and scale transformative projects and solutions to protect people. And we must together protect people against ageing demographics, against climate change, and against a changing world order. Thank you all for your continued commitment to come together to build a more resilient insurance sector.

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[1] Source: United Nations Data Portal - link

 [2] Source: Data.gov.sg’s data on Annual Government Operating Expenditure By Sector – link

 [3] Source: WMO’s report on State of the Climate in Asia 2024 – link

[4] Source: OECD’s report on Protection Gaps in Insurance for Natural Hazards and Retirement Savings in Asia – link