EIOPA Supports ESRB Views on Liquidity Risk Monitoring for Insurers
EIOPA issued a statement supporting views of ESRB on the importance of improving the monitoring of liquidity risks in the insurance sector. Earlier, in a letter addressed to the EIOPA Chair, ESRB strongly encouraged EIOPA and its members to promptly finalize and operationalize the framework for monitoring of liquidity risks in the insurance sector. In its statement, EIOPA highlights that, as a response to COVID-19 crisis, it has already developed and put in place a proportionate framework to enhance the nature and the consistency of the information collected on liquidity risks. Until now, there is no evidence of the materialization of liquidity risks in the insurance sector.
The ESRB letter, states that, to date, there has been a lack of consistent data for assessing the magnitude of potential liquidity risks in the insurance sector and the related financial stability risks. Therefore, supervisors may not be in a position to judge with confidence the scale of potential liquidity pressures in the future and the potential financial stability implications of a crystallization of such liquidity risks. In the past, ESRB has flagged that the Solvency II review presents an opportunity to better enable supervisors to address liquidity risk of insurers with a vulnerable liquidity profile. Additionally, ESRB judges that, in the near term, priority should be given to improved monitoring of liquidity risks in the insurance sector, to enhance Europe’s preparedness to respond to potential future shocks that could lead to a deterioration in financial stability conditions.
In response, this recent statement from EIOPA clarifies that, as part of the Solvency II Review, EIOPA has consulted on concrete proposals to reinforce the macro-prudential dimension of the regime; this includes elements to strengthen the tools available to assess and monitor liquidity risks. The proposals will be assessed in the coming months in face of the COVID-19 evidence. The statement adds that EIOPA will continue to contribute to the ESRB work to support the stability of the insurance sector and its contribution to the overall stability of the financial system.
Related Links
Keywords: Europe, EU, Insurance, Solvency II, Liquidity Risk, Financial Stability, COVID-19, Solvency II Review, ESRB, EIOPA
Featured Experts

Adam Koursaris
Asset and liability management expert; capable modeler; risk and capital specialist

Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.

Cassandra Hannibal
Life insurance actuary; risk management and economic capital specialist
Related Articles
HKMA Enhances Loan Guarantee Scheme to Alleviate Pressure on SMEs
HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.
EBA Proposes Standards for Supervisory Cooperation Under IFD
EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.
BoE Sets Out Plan to Transform Data Collection from Financial Sector
BoE has set out a three-phased plan to transform data collection from the UK financial sector over the next decade.
BIS Issues Updates on Technology Initiatives on Cross-Border Payments
BIS recently made a couple of announcements with respect to the planned and ongoing work in the area of financial technology.
ESRB Updates List of Macro-Prudential Measures in February 2021
ESRB updated the list of national macro-prudential measures applied by each member state in the European Economic Area.
BoE Survey Shows Positive COVID Impact on Outsourced Banking Services
BoE has set out results of a survey on the impact of COVID-19 events on the use of machine learning and data science.
ECB Issues Opinion on Proposal to Regulate Crypto-Asset Markets in EU
In response to a request from the European Council and Parliament, ECB published an opinion on the proposed regulation on markets in crypto-assets.
APRA Announces Aggregate Committed Liquidity Facility for Banks
APRA announced the updated aggregate amounts for the 2021 Committed Liquidity Facility (CLF) established between the Reserve Bank of Australia (RBA) and certain locally incorporated authorized deposit-taking institutions that are subject to the Liquidity Coverage Ratio (LCR).
ECB and UK Authorities Agree on Post-Brexit Supervisory Cooperation
ECB published supervisory Memorandums of Understanding (MoUs) with UK as well as other European and non-European authorities.
EIOPA Outlines Strategic Supervisory Priorities for Insurance Sector
EIOPA identified business model sustainability and adequate product design as the two EU-wide strategic supervisory priorities.