EIOPA updated the risk dashboard based on Solvency II data for the second quarter of 2020. The dashboard, which is based on data from 98 insurance groups and 2,507 solo insurance undertakings, summarizes the key risks and vulnerabilities in the insurance sector in EU through a set of risk indicators. For the first time, this risk dashboard also includes a forward-looking element to reflect the expected developments and capture potential distress in the insurance sector for all the risk categories. Based on the data, EIOPA concluded that insurers in EU are slightly less exposed to risks, when compared to the beginning of COVID-19 outbreak, but concerns remain. Going forward, an increasing trend for credit risks and market risks, is expected over the next 12 months.
Overall, the results show that the risk exposures of the insurance sector in EU slightly reduced, compared to July risk assessment. However, insurers are exposed to very high levels of macro risk, while market, credit, profitability, and solvency risks decreased to medium level. this risk assessment does not account for the outbreak of the second wave of the pandemic. With regard to macro risk, Gross Domestic Product (GDP) growth forecasts at the end of September show the strongest expected decline in the last quarter of 2020 and first recovery in the second quarter of 2021. The effects of the new wave of the pandemic might skew further downward GDP growth. Profitability and solvency risks decreased to medium level. Solvency Capital Requirement ratio for groups slightly improved from the first quarter of 2020 to the second quarter of 2020, though remaining at lower levels than the fourth quarter of 2019. All half-year profitability indicators, which now include the first months of the COVID-19 crisis and their impact on financial returns, show the expected signs of deteriorations.
The stabilization of the financial markets at the end of the third quarter 2020 partially eased the challenging situation for European insurers: market and credit risk indicators had stabilized at the end of September 2020. The price gap between stocks and the economic outlook remain a concern, as it could result in sharp valuation adjustments. The creditworthiness of the assets in insurers’ portfolios is under close monitoring. The outlook of those risk categories reflects information available until the third quarter 2020. Insurance risks remain at medium level, driven by general concerns over decrease in premium growth and in some member states over reserve adequacy. More specifically, year-on-year premium growth for life reported a significant deterioration for the second consecutive quarter, indicating a negative impact from the COVID-19 outbreak. While market perceptions exhibit a decreasing trend, they are still at a medium level.
Keywords: Europe, EU, Insurance, Risk Dashboard, Solvency II, SCR, Credit Risk, Market Risk, EIOPA
The Bank for International Settlements (BIS) published a paper that studies impact of fintech lending on credit access for small businesses in U.S.
The Prudential Regulation Authority (PRA) issued the policy statement PS8/22 to amend the Own Funds and Eligible Liabilities (CRR) Part of the PRA Rulebook and update the supervisory statement SS7/13 titled "Definition of capital (CRR firms).
The European Banking Authority (EBA) launched the EU-wide transparency exercise for 2022, with results of the exercise expected to be published at the beginning of December, along with the annual Risk Assessment Report.
The Single Resolution Board (SRB) welcomed the adoption of the review of the Capital Requirements Regulation, or CRR, also known as the "CRR quick-fix."
The European Commission (EC) recently adopted the Delegated Regulation 2022/1622, which sets out the regulatory technical standards to specify the countries that constitute advanced economies for the purpose of specifying risk-weights for the sensitivities to equity.
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.