INDUSTRY SUFFICIENTLY CAPITALISED FOR SOLVENCY II, EIOPA STRESS TEST FINDS

The European insurance sector is, for the most part, sufficiently capitalised for the upcoming Solvency II regime, according to the results of EIOPA’s European Union-wide Insurance Stress test. The test did highlight some vulnerabilities within the sector, with 14% of companies generating a solvency capital requirement of below 100%. EIOPA said the test had shown the industry to be most vulnerable to a stress scenario which combined a decrease in asset values with a lower risk-free rate, but found 56% of companies would have sufficient capital in the most severe stress scenario. EIOPA has called on national supervisory authorities to engage with companies to ensure they have a “clear understanding of their risk exposures and their vulnerability to given stress scenarios and that they have the capacity to take recovery actions if those vulnerabilities materialise.