Rising affluence and a growing middle class in Singapore will drive the insurance business in Asia to an eight per cent growth per annum over the next ten years, with the region likely to account for around 40 per cent of the global market by 2020, says Ravi Menon, managing director of the Monetary Authority of Singapore.

In his keynote speech during the 12th Singapore International Reinsurance Conference, Menon said that as the Asian risk landscape transforms, there will be a greater demand for insurance and re-insurance products and services in the next years. Rising affluence, vulnerability to natural catastrophes and an ageing population will inspire and drive individuals to plan for their financial futures. 

"By 2040, Asia and the Pacific will be home to 62 per cent of the world's elderly population. This will lead to greater demand for health insurance, annuity and other retirement security products," said Menon.

"Singapore is well-equipped to serve the growing needs of the region. But to become a global marketplace for insurance, we have continually reinvent ourselves," he added. 

MAS had adopted a closed-door policy to direct insurers since 1990, but in 2000 decided to open up and liberalise the insurance industry by lifting the ban on direct providers, as well as the 49 per cent foreign shareholding limit in locally-owned direct insurers. Since then, the offshore business has grown an average of 13 per cent per annum to S$5.4 billion ($4.3 billion) in 2012. Sixteen of the world's largest reinsurance firms have regional hubs in Singapore.

As far as the wealth management sector is concerned, an important element of insurance is the life insurance field, such as in areas such as private placement, where certain tax and other benefits can arise. To see an article on that issue, click here.