What the rather unconventional future of insurance holds for Singapore

In recent years major insurers, reinsurers, and insurance brokers have moved much of their Asian-focused business to Singapore - and for good reason. As Singapore has grown as a major financial services centre the demand for both regional and international risk management solutions has grown.

Additionally, the commercial environment is well suited to support the developing insurance sector with a well-respected legal system, first-class infrastructure, attractive tax regimes, and an abundant supply of talented workers.

But increasingly questions are being asked around the insurance sector’s ability to provide solutions that are relevant to modern business.

Singapore is already well known as an international insurance hub. But traditional insurance can only go so far, adequately protecting against risks which are well understood.

Property, life, energy and shipping - all areas where comprehensive coverage is regularly taken out against known risks. But Singaporean companies, and their global counterparts, are facing a new range of threats to their businesses, and they are finding that only a few suppliers can provide adequate protection.

With the Singapore Government encouraging local enterprises and entrepreneurs to expand their commercial activities around the World, insurance, and risk is assessment should now be at the top of the list of concerns for CEOs and company boards. Local businesses - both large multinationals and developing SMEs (Small and Medium Enterprises) - are increasingly facing issues around global business risk as they expand.

With innovative products and increasingly complicated supply chains, new risks and threats to operations have been uncovered. This can be seen in both high-growth areas, such as the technology industry (in data protection, cloud computing, and privacy), as well as in manufacturing (where companies are now dealing with large number of suppliers and subcontractors).

Traditional insurance products have struggled to keep up with the changing face of commerce. However, this has opened the door for Singapore, and those companies agile enough to understand changing client needs, to develop into Asia’s centre for unconventional insurance products.

It is safe to say that most businesses understand traditional insurance, and those that don't...well, they are wearing the corporate and personal risks of doing business by themselves.

Most companies will have insurance covering major assets - buildings and ships for example. These are tangible assets and are relatively easy to quantify. But these assets are no longer a true representation in where the value of a company lies.

Unconventional insurance is still in its infancy. But it is being developed as a response to managing different types of risks and shift in company assets from ‘physical’ to ‘virtual’. These can now cover threats to company's virtual assets like brand, reputation, intellectual property and data and risks such as cyber, trade credit and supply chain.

For Singapore there are some major advantages in being at the forefront of insurance product innovation. It is a high-value areas of business, and fits in well with the image of the island-state as an innovator.

But is also reflects the country's developing economic needs. As Singapore pushes the boundaries in other areas of business, the ability to manage risk and protect ‘assets’ and shareholders’ equity is becoming increasingly important.