Risk Dashboard shows unchanged risk levels for European insurers

The European Insurance and Occupational Pensions Authority (EIOPA) published today its Risk Dashboard based on Solvency II data from the third quarter of 2021. The results show that insurers’ exposures to macro risks remain at a high level while all other risk categories, such as insurance as well as profitability and solvency risks stay at medium levels.

With regards to macro risks, inflation forecasts have been revised upwards and the 10-year swap rates have increased across main currencies. Unemployment rates are still elevated. Financial markets stay broadly stable. Monetary policies remain accommodative although asset purchases continue at a slower pace and are expected to decelerate further .

After six quarters of increasing trend, solvency position for groups decreased, but still remained above year end 2020 level. SCR ratio for solo life undertakings slightly improved. Profitability indicators reported a slight deterioration, with a rise in the net combined ratio for non-life business.

Interlinkages and imbalances risks remain at a medium level. Insurance groups’ exposure to banks decreased, while the median investments in insurances and other financial institutions rose slightly. Insurance risks remain at a medium level with year-on-year premium growth for life insurance showing a slight deterioration.

Environmental, social and goverance (ESG) related risks are at a medium level. The catastrophe loss ratio decreased slightly compared to the previous quarter, albeit it may not yet reflect the potential negative impact of the European floods events in summer 2021.

Digitalisation and cyber risks are at medium level. The materiality of these risks for insurers as assessed by supervisors remains contained. The frequency of cyber incidents impacting all sectors of activity, as measured by available data, decreased since the same quarter of last year, but it is still high compared to the long term average. The indicators in this risk category are exploratory and will be further developed as new data becomes available.

Go to the Risk dashboard

Background

This Risk Dashboard based on Solvency II data summarises the main risks and vulnerabilities in the European Union insurance sector through a set of risk indicators of the third quarter of 2021. The data is based on financial stability and prudential reporting collected from 95 insurance groups and 2190 solo insurance undertakings.