Risk dashboard

The risk dashboard presents EIOPA's quarterly risk assessment of the European Union insurance industry

With the implementation of the Solvency II regime in January 2016 substantial improvements as regards the risks' quantification and the reporting standards were introduced. The enhanced data of all (re)insurance undertakings subject to the Solvency II regime is the basis of the newly developed and improved analytical risk dashboard.

Risk Dashboard October 2021 (Q2-2021 Solvency II Data)

Note:  The structural break as of Q1 2020 related to the Brexit withdrawal agreement and represented with a dashed line indicates a break in the number of undertakings of the time series and rebalance of the country weights. Additionally, adjusted time series for EU27 before Q1 2020 are also disclosed to reflect potential variations driven by the structural break in the sample.

Key observations

The European Insurance and Occupational Pensions Authority (EIOPA) published today its Risk Dashboard based on Solvency II data from the second 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. Unemployment rates are still elevated but on a decreasing trend. Financial markets stay broadly stable, amid fiscal and monetary support.

Overall profitability indicators and solvency positions for insurance groups continued improving in the second quarter of 2021. Insurance risks continued at a medium level, with year-on-year premium growth for non-life and life undertakings increasing for the second consecutive quarter. Market perceptions remain at a medium level.

The environmental, social and goverance (ESG) related risks, included for the first time in the current Risk Dashboard, are at a medium level, with transaction and physical risks slightly improving. The catastrophe loss ratio decreased compared to the previous quarter, albeit not yet reflecting the potential negative impact of the European floods events in summer 2021.

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 second quarter of 2021 complemented with market data and other available information. Solvency II data is based on financial stability and prudential reporting collected from 99 insurance groups and 2741 solo insurance undertakings.

Note:

  • Reference date for company data is Q2-2021 for quarterly indicators and 2020-YE for annual indicators. The cut-off date for most market indicators is mid-September 2021.
  • Risk Levels are based on a 4-level scale from Low (green) to Very high (red). Risk trend reports the quarter on quarter variation of the risk based on a 5-level scale from Substantial Decrease to Large Increase.

The Outlook displayed for the next 12 months is based on the responses received from 29 national competent authorities (NCAs) and ranked accordingly to the expected change in the materiality of each risk (substantial decrease, decrease, unchanged, increase and substantial increase).

From October 2021, a new ESG related risks category and an enhancement of the liquidity and funding risks category are included in the EIOPA’s risk dashboard. For the latter, the trend shown has been computed with the reviewed past risk level.