Today, the European Insurance and Occupational Pensions Authority (EIOPA) published its updated Risk Dashboard based on the fourth-quarter 2016 data.
The results show the risk exposure of the insurance sector in the European Union remained overall stable and some positive market developments were identified. Solvency II ratios are stronger due to higher market values of assets and the increase of the risk free curve used for discounting the technical provisions. Volatility has decreased and inflation rates have slowly started to converge to desired target levels.
Despite these positive signs, the continuing low-yield environment and the observation that market fundamentals might not properly reflect the underlying credit risk, are still important concerns for the European insurance industry. This is also reflected in the slightly deteriorating market perception and the recent underperformance of insurance stock prices.
The Risk Dashboard is a quarterly publication summarising the main risks and vulnerabilities in the European Union insurance sector by using a set of indicators grouped into seven risk categories: macro risks, credit risks, market risks, liquidity and funding risks, profitability and solvency, interlinkages and imbalances and insurance (underwriting risks). An additional category "Market perceptions" gives the insight in how the insurance industry is perceived by financial markets. More information in the Background note.
The data covered by the Risk Dashboard is based on the financial stability and prudential reporting of a sample of 93 insurance groups and 3,076 solo insurance undertakings.