As choices to provide insurance-linked securities (ILS) and catastrophe bonds broaden in Asia, with the introduction of Hong Kong as a controlled ILS platform, guests at our virtual ILS Asia 2021 conference today become aware of the support Chinas government is offering to the initiative.Our virtual ILS Asia 2021 conference, held in association with headline sponsor AM RE Syndicate Inc., started today with a keynote interview with Mr. Simon Lam, Executive Director, General Business at the Hong Kong Insurance Authority.
This interview can now be seen on-demand here.
Hong Kong currently has a recognized insurance coverage and reinsurance market, while its legislative preparations for ILS were completed at the beginning of 2021.
Ever since the Insurance Authority has been building out its licensing and supervision infrastructure, with the support of an ILS working group, including significant ILS market players, Mr. Lam described to the ILS Asia 2021 audience.
” As we all know, being efficient in licensing is really, very essential for ILS issuers,” he discussed. Saying that “We likewise started an ILS capability building exercise for staff of the Insurance Authority, through the engagement of a professional ILS specialist.”
” The final piece was when the pilot ILS grant scheme was launched by the Hong Kong federal government in May,” Lam continued, stating that, “If you ask me where are we now, I would state that we are 99% all set for the first issuance.”
At the exact same time Hong Kong has been engaging with possible sponsors of insurance-linked securities (ILS) plans, to create preliminary deal-flow interest.
Mr. Lam told our conference audience that, “In parallel, we are soliciting support from prospective sponsors and Im happy to recommend that we are already dealing with the very first feline bond and ideally, if all things work out, we will have the very first ILS problem out of Hong Kong within this year.”
Here, Mr. Lam is describing the transactional work to support a disaster bond issuance under the newly signed up car we exposed in a current news report, with Greater Bay Re Limited registered as a business that will be accredited and used to release a catastrophe bond on behalf of sponsor China Re.
Its encouraging to hear direct from the regulator that work to get this first Hong Kong catastrophe bond to market is well underway.
Hong Kongs aspirations lie more broadly and it would like to draw in sponsors from all over the world, although Lam acknowledged that the close ties with China are really crucial to its nascent ILS platform.
” Hong Kong is not just targeting Asian providers, however certainly our geographical place and time zone will pre-dispose us to the Asian companies sector,” Lam continued.
Including that, “Mainland China is a crucial cornerstone in our ILS technique. With the quick growth of the mainland insurance market we are seeing very strong need for threat transfer versus nat feline, such as tropical storms and earthquakes.”
The burgeoning Chinese insurance and reinsurance market is an opportunity and Lam hopes that Hong Kong can act as a platform for mainland insurers to release disaster bonds.
To which end there is likewise essential support from Chinas government Lam discussed.
” In this context, the mainland (China) federal government has actually put up a main policy initiative to support mainland insurance providers to provide catastrophe bonds in Hong Kong,” Lam stated. Including that this is, “Both to promote ILS and likewise in the context of the Greater Bay Area Development Initiative.”
With the first disaster bond to be released out of Hong Kong most likely to be the appropriately called Greater Bay Re, sponsored by China Re, the close cooperation in between Hong Kong and the mainland China federal government are currently set to deliver benefits.
” At the Insurance Authority we are also in close intermediary with our peer regulator in China, the China Banking and Insurance Regulatory Commission on the policy support started. These are extremely strong policy support in regards to kick-starting Hong Kong as an ILS residence,” Lam stated.
You can watch this session of ILS Asia 2021 on-demand here.
As the on-demand playback, we will be archiving every session from our online and virtual ILS Asia 2021 conference over on our YouTube Channel in the coming weeks and audio variations will also be submitted to our podcast which you can subscribe to here.
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