Crawford mpany : The growing appeal of Singapore’s captive sector

The recent uptick in insurance rates and tightening of terms across many business lines - and in particular in distressed sectors - is driving greater interest in captive insurance, as companies look to retain more risk on their balance sheet and capitalize on potential profit-generation through a self-insurance strategy.

While captive market stalwarts such as Bermuda, Vermont and Cayman are often a first port of call, the growing appeal of Singapore's captive insurance regime is proving an increasing draw for companies re-evaluating their risk transfer strategies. In fact, the territory is currently generating a strong pipeline of prospective captive formations while interest from existing owners in expanding existing captive usage is growing.

While Singapore offers multiple advantages that are the mainstay of any successful captive hub, such as stable political environment, a mature insurance market and a globally recognized technology and services infrastructure, it is also introducing measures specifically designed to boost its captive insurance appeal.

In 2020, the region confirmed that it would extend the Insurance Business Development (IBD) umbrella scheme and the IBD-Captive Insurance scheme to 2025, under which new and existing Singapore captives are granted a concessionary tax rate of 10%. This clearly demonstrates the commitment of the Monetary Authority of Singapore to expanding its captive market position as it seeks to position itself as a center of excellence for risk transfer innovation. And given the ongoing impact of the pandemic and the financial strains this has created, any measures designed to enhance the economic benefits of the captive structure will clearly be viewed positively.

In addition, the Singapore Government has sought to further elevate its financial center value proposition by issuing substantial digital grants which captive insurers can utilize to enhance their data management infrastructure - perhaps the most critical component of a captive structure.

Applying claims data analysis in the captive context is critical to maintaining optimal performance at every stage in the structure lifecycle. Crawford is currently working with several Asian clients in the process of establishing captives in Singapore. This means that at the initial structuring stage we can put in place the data analysis infrastructure that will help generate risk management insights and drive improvements. Integrating that claims functionality also means we can facilitate shifts in risk retention strategies, expansions into new lines, or in the event of an impacting loss, the speedy resolution of claims.

Crawford has also invested heavily in its data and technology capabilities in the region. Singapore clients now have access to an enhanced range of capabilities, including 3D imaging technology for post and pre-loss assessments and data analytics solutions that allow Crawford to feed insights back to captive owners to help improve risk management and drive-up recovery rates. Having access to such capabilities is clearly beneficial to building an effective and responsive captive structure.

Singapore's upward trajectory on the financial stage shows no sign of slowing any time soon. With more and more leading companies across multiple business sectors relocating operations to the economic hub, its status as a commercial center continues to grow. Add to that the Singapore Government's clear commitment to building out the captive component of its financial services, and it looks set to become a leading captive hub on the international stage.