The European Insurance and Occupational Pensions Authority (EIOPA) published today its Risk Dashboard based on Solvency II data from the fourth quarter of 2021.
The results
show that insurers’ exposures to macro risks are currently the main
concern for the insurance sector. Macro risks remain at a high level
together with digitalisation and cyber risks, while the other risk
categories, such as insurance as well as profitability and solvency
risks stay at medium levels.
With regard to macro risks, forecasted GDP growth at global level
decreased while inflation forecasts for main geographical areas show an
upward trend, reflecting the ongoing Russian invasion of Ukraine and
subsequent further increases in energy prices. Credit risks have not
changed significantly and remain relatively moderate, even though CDS
spreads for financial unsecured and non-financial corporate bonds
increased in the first quarter of 2022. The median investment in bonds
and loans has not changed in the last quarter of 2021. Market risks
overall did not increase compared to the previous assessment,
notwithstanding the significant impact of Russia’s invasion of Ukraine.
Volatility in the bond market and the equity market increased in the
first quarter of 2022 reflecting uncertainties related to the
geopolitical situation.
Profitability and solvency risks remain at medium levels. Groups’
solvency position improved, while the SCR ratio for solo life and
non-life undertakings slightly dropped. Return on excess of assets over
liabilities and return on assets both decreased but remain above the
2020 levels.
Interlinkages and imbalances risks remain at a medium level with
insurance groups’ exposure to insurances reporting a drop. The median
investments in other financial institutions went up.
Environmental, social and goverance (ESG) related risks are at a
medium level. The median growth of insurers’ investment in green bonds
has slightly increased. The y-o-y growth in the amount of outstanding
green bonds has also been volatile and it increased in the last quarter.
The catastrophe loss ratio slightly decreased compared to the previous
quarter.
Digitalisation and cyber risks rose to a high level. The materiality
of these risks for insurance as assessed by supervisors increased given
the resurgence of cyber security issues and concerns of a hybrid
geopolitical conflict. Cyber negative sentiment indicates a mounting
concern in the first quarter of 2022. The frequency of cyber incidents
impacting all sectors of activity, as measured by publicly available
data, has increased significantly since the same quarter of last year.
Risk Dashboard
EIOPA
© EIOPA
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