The European Insurance and Occupational Pensions Authority (EIOPA) published for the first time after the implementation of the new Solvency II regime its new risk dashboard.
Although Solvency II implied a major change in the methodological framework for the calculation of the solvency capital requirements, the initial transition to the new regime was smooth. The results for the third-quarter 2016 show that the low-yield environment and market risks continue to be a major challenge for the European insurance sector.
The new EIOPA risk dashboard is based on an extended sample of undertakings and on an improved methodological approach.
Key observations are:
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Since the last publication of the EIOPA risk dashboard, several important political events have taken place which have contributed to a lot of political uncertainty. Impacts on the financial markets are not always in line with expectations. Meanwhile, the low-yield environment continues to be a major challenge for the European insurance sector. Combined with the still on-going expansionary monetary policy of several central banks, these observations resulted in a high macro risk evaluation.
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In the beginning of 2016, Solvency II, the new prudential regime for insurance companies, was introduced in Europe. Despite the regime implying a major change in the way insurance companies have to set up their balance sheet and calculate their solvency capital requirements, the initial transition has been rather smooth resulting in a stable median risk score for the profitability & solvency risk category.
Full risk dashboarad
Background note
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