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 – Third quarter 2018
The results of the third quarter 2018 show that the risk exposure of the European Union insurance sector remains broadly stable. Given the ongoing reduction in the accommodative stance of monetary policy, macro risks stand at medium level. However, further downward revisions of economic growth forecasts remain a concern going forward. Credit and market risks continue at medium level, with Credit Default Swaps (CDS) spreads for corporate bonds as well as equity market volatility increasing since September. Interlinkages and imbalances risks increased due to an increase in intrasectoral exposures, that can be explained by corporate actions and Mergers and Acquisitions (M&A) activities by some insurance groups. Insurance risks also increased following the impact on (re)insurers loss ratios of the natural catastrophes observed in 2018Q3, but remain at low level. Underpricing and underreserving driven by competition could be a concern for some lines of business. Market perceptions are stable at medium level, with insurance stocks outperforming the market in spite of a general deterioration in equity market performance. Insurers' price-to-earnings ratios went slightly down, while CDS spreads slightly increased.
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 2018. This data is based on financial stability and prudential reporting collected from 96 insurance groups and 2,906 solo insurance undertakings.
- Reference date for company data is Q3-2018 for quarterly indicators and 2017-YE for annual indicators. The cut-off date for most market indicators is beginning of January 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 – January 2019
Previous Risk Dashboard Publications
Previous Risk Dashboard publications are available here