Singapore pilot project to channel life insurer investments into sustainable infrastructure 

Singapore Deputy PM and MAS chief Lawrence Wong says pilot will help insurers become more familiar with infrastructure investments and encourage them to allocate more of their portfolios to promising decarbonisation projects.

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Singapore pilot project to channel life insurer investments into sustainable infrastructure
Singapore pilot project to channel life insurer investments into sustainable infrastructure
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Singapore pilot project to channel life insurer investments into sustainable infrastructure

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The Monetary Authority of Singapore (MAS) is working on a pilot project to support the flow of life insurance investments into sustainability-related infrastructure projects in Asia, said the city’s Deputy Prime Minister and chair of the MAS Lawrence Wong. 

The pilot is one of a range of initiatives in Singapore aimed at shoring-up the sector and its impact, with initiatives also considering the transition to net zero, technology adoption and the use of generative AI as well as talent development. 

We hope this initiative can provide an impetus for insurers to allocate some of their investment portfolio to infrastructure projects with promising decarbonisation potential and therefore play a role in the region’s net zero transition.

The new pilot program Wong discussed will test a tailored package of risk guardrails, risk-appropriate regulatory treatment and capability-building facilities to help the insurance industry become more familiar and comfortable with infrastructure investments while putting in place suitable investment caps. 

Wong announced the pilot during a keynote speech on Tuesday, November 7, during the second day of the Global Insurance Forum held in Singapore. 

“We hope this initiative can provide an impetus for insurers to allocate some of their investment portfolio to infrastructure projects with promising decarbonisation potential and therefore play a role in the region’s net zero transition,” Wong said.

Beyond the pilot, Wong also welcomed the launch of the WTW Asia-Pacific Climate Risk Centre in Singapore, which will develop risk advisory, analytics and risk financing solutions for firms in sectors that use carbon as an integral part of their processes. 

“The centre adds to the growing community of Asia-focused climate financing capabilities across the financial sector, academia and professional services based in Singapore,” Wong added. “So I encourage strong collaboration between these teams so we can all accelerate the green transition in Asia.”

MAS also recently proposed guidelines on transition planning for banks, insurance and asset managers in Singapore, he added. Part of this plan will involve stewarding clients to transition to net zero in an orderly manner, rather than indiscriminately cutting ties with clients deemed to be of higher climate risk. 

“A structured process, active engagement, and a risk-proportionate approach, taking into account sectoral and firm-specific factors, will be important aspects of transition planning,” he said.

GenAI guardrails necessary: Wong

In his speech, the deputy prime minister — who is slated to take over leadership of Singapore’s ruling People’s Action Party by November next year — emphasised “3 Ts” that can help accelerate the value of insurance – transition, technology and talent. 

Besides MAS’s initiatives supporting a net-zero carbon transition in the financial sector, the regulator has also facilitated the development of a governance framework for responsible AI, and launching Project MindForge, which looks into the risks and opportunities that generative AI (GenAI) poses for the financial sector, Wong said.

While a GenAI model failure can be rare, a model failure can result in widespread damage if it is fully trusted in the wrong scenario, he added. 

“You may say the chance of a model failure is only 1%, but that 1% failure can have widespread implications if applied wrongly,” Wong said. “Guardrails are necessary so that financial institutions can adopt GenAI in a responsible manner.” 

Project MindForge also provides a platform that pulls data resources from the financial industry with GenAI technologies to test use cases in compliance, Wong added. “The iterative process will generate learnings to improve the industry’s overall resilience and provide a control approach towards the safe adoption of GenAI, and we hope to welcome on board more insurers on this platform.” 

You may say the chance of a model failure is only 1%, but that 1% failure can have widespread implications if applied wrongly.

Supporting talent needs

The regulator is also supporting efforts to build an adequate base of tech and AI talent for the financial services sector, and has launched several programmes in this area. There is a need for more collaborative efforts between industry and universities to develop future insurance leaders, and Singapore is committed to supporting the sector’s talent needs, Wong said. 

“Addressing Asia’s growing insurance needs will require a strong base of Asia-savvy talent, with the required linguistic skills recognising the diversity of Asia, the in-market experience, the networks and the insurance aptitude, and talent remains a gap in the market,” Wong said. 

MAS has developed a wide range of programmes to cultivate talent in the insurance industry and Wong encouraged key companies in the sector to work closely with the regulator in this area. 

“Talent development and innovation will continue to be key drivers of value, and it is appropriate that the GIF is focusing on these areas,” he added. “I’m confident that the insurance industry will further deepen its value to society, in supporting the climate transition, in harnessing the use of technology, and developing the talent needed to make all these possible.” 

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