16th May 2018

EIOPA launches fourth stress test for European insurance sector-including cyber risk for the first time

The European Insurance and Occupational Pensions Authority (EIOPA) has launched its fourth stress test for the European insurance sector. This regular exercise aims to assess insurers’ vulnerabilities. It is not a pass-or-fail-exercise.
For each stress test, EIOPA tailors the scope and scenarios according to developments in market conditions and their potential negative implications for insurers. The 2018 scenarios encompass a combination of market and insurance
specific risks, including a natural catastrophe scenario. The objectives of the fourth insurance stress test are:
-To assess vulnerabilities of the European insurance sector to specific adverse scenarios with potential negative implications for the European financial markets and the real economy
-To raise the awareness of the potential threats to financial stability posed by the insurance sector at the European level
-To increase transparency by requesting the voluntarily disclosure of individual results by participating groups.
This year’s exercise targets 42 European insurance groups. EIOPA, in coordination with the national competent authorities, selected the companies according to size,
European Union-wide and local market coverage as well as relevance for financial stability. In total, the target sample represents approximately 78% European market
coverage, based on total consolidated group assets according to Solvency II financial stability reporting.
The deadline for submission of results to the national competent authorities is 16th August. EIOPA will regularly publish questions and answers addressing queries from the participating groups. The publication of the stress test results is planned in January 2019.
Gabriel Bernardino, chairman of EIOPA, comments “The scenarios reflect severe but plausible external shocks including insurance specific shocks. Furthermore, for the
first time the exposure to cyber risk and best practices in dealing with these risks is assessed. This stress test will therefore provide further valuable insight to the
resilience of the European insurance sector. The increased transparency is key to ensure a level playing field and enhance market discipline among the stress test participating groups.

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