Singapore eyes new corporate structure for insurance risk transfer

MAS says the framework could speed up risk transfer to capital markets.

The Monetary Authority of Singapore (MAS) will consult on introducing a new corporate structure for insurance, called a Protected Cell Company (PCC), to scale alternative risk-transfer solutions.

A PCC allows assets and liabilities to be ring-fenced within individual cells under a single core entity, allowing different risks to be structured separately whilst using shared infrastructure, according to Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong.

“The result is greater flexibility, lower cost and more efficient risk transfer,” Gan said during the Association of Banks in Singapore’s Annual Dinner on 25 June.

The proposed structure can make captive insurance solutions more accessible for corporates, and make it faster and cheaper for sponsors of insurance-linked securities to transfer risks to capital markets, he added.

Gan, who is also chairman of MAS, said the authority will share more details of the public consultation in the coming weeks.

The move comes as Asia remains significantly underinsured, with traditional insurance and reinsurance capacity continuing to be crucial.

“The financial centres that can bring together underwriting expertise, reinsurance capacity, alternative capital and flexible risk-transfer structures will be best positioned for growth,” Gan said.