Risk Dashboards

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 July 2019 (Q1-2019 Solvency II Data)

Risks Level Trend
1.     Macro risks High constant
2.     Credit risks Medium constant
3.     Market risks High constant
4.     Liquidity and funding risks Medium stable
5.     Profitability and solvency Medium increase
6.     Interlinkages and imbalances Medium constant
7.     Insurance (underwriting) risks Medium

constant

Market perceptions Level Trend
8.     Market perceptions Medium constant    

 Key observations:

The results of the July 2019 Risk Dashboard show that the risk exposure of the European Union insurance sector remains overall stable, with macro and market risks now at a high level. This is due to a further decline in swap rates and lower returns on investments in 2018, which put strain on those life insurers offering guaranteed rates. The low interest rate environment remains a key risk for the insurance sector. Credit risks continue at medium level with broadly stable Credit Default Swap (CDS) spreads for government and corporate bonds. Profitability and solvency risks increased due to lower return on investments for life insurers observed in year-end 2018 data; Solvency Capital Requirement (SCR) ratios are above 100% for most undertakings in the sample even when excluding the impact of the transitional measures. Market perceptions where marked by a performance of insurers' stocks broadly in line with overall equity markets, while median CDS spreads have slightly increased. No change was observed in insurers' external ratings and rating outlooks.

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 fourth quarter of 2018. This data is based on financial stability and prudential reporting collected from 96 insurance groups and 2,868 solo insurance undertakings.

Note:

  • Reference date for company data is Q1-2019 for quarterly indicators and 2018-YE for annual indicators. The cut-off date for most market indicators is mid-June 2019.
  • 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.

EIOPA Risk Dashboard – July 2019

Previous Risk Dashboard Publications