EIOPA announces results of the EU-wide insurance stress test 2014

30 November 2014

The insurance sector is in general sufficiently capitalised in Solvency II terms.

The European Insurance and Occupational Pensions Authority (EIOPA) announced November 30 the results of its EU-wide Insurance Stress Test. The exercise aimed to test the overall resilience of the insurance sector and to identify its major vulnerabilities. 

Undertakings estimated a baseline scenario using the upcoming Solvency II regime, without internal models, and on top of that tested a number of severe macro-economic and insurance specific shocks, including a prolonged period of low yields (“Japanese-like” scenario) and a sudden reverse in interest rates (“Inverse” scenario). 

The results of the baseline scenario indicated that the sector is in general sufficiently capitalised in Solvency II terms. Nevertheless, 14% of the companies representing 3% of total assets, had an SCR ratio below 100%.

The stress test results showed that the insurance sector is more vulnerable to a “double hit” stress scenario that combines decreases in asset values with a lower risk free rate. However, 56% of the companies would have a sufficient level of capital under the most severe “double hit” stress scenario. The major vulnerabilities as per the insurance specific stresses were mass lapse, longevity and natural catastrophes.

Full press release


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