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MAS says ILS can help fund and transfer risks in Asia’s infrastructure build
MAS highlighted ADB’s estimate that Southeast Asia needs about US$210 billion in infrastructure investment annually, with data centers alone expected to require more than US$280 billion in additional capacity by 2030.
Insurance-linked securities, including catastrophe bonds, can complement traditional insurance and reinsurance by providing additional risk-bearing capital for large infrastructure projects in Asia, the Monetary Authority of Singapore (MAS) said. Speaking at the International Association of Engineering Insurers annual conference in Singapore, MAS Executive Director Lim Cheng Khai pointed to the scale of new builds across the region, including new grids, railways, data centers, power plants, and renewable energy projects, and argued that stakeholders need mechanisms that can understand, reduce, and finance the risks involved.
Lim cited an Asian Development Bank estimate that Southeast Asia needs around US$210 billion of infrastructure investment every year to sustain economic growth, address poverty, and respond to climate impacts. He added that data centers are among the fastest growing categories and that Asia-Pacific is expected to require more than US$280 billion in additional data-center capacity by 2030 as artificial intelligence build-outs accelerate.
MAS said some risk will remain even with strong engineering and risk management, and that expanding and accessing new risk-bearing capacity will matter as infrastructure needs and exposure levels rise. In that context, the regulator said traditional insurance and reinsurance will remain central, while alternative capital sources such as ILS can broaden the pool able to absorb those risks, including for new exposures tied to digital infrastructure and power build-outs.