EIOPA issues recommendations to National Competent Authorities to address vulnerabilities identified by the 2018 Insurance stress test

26 April 2019

The Recommendations consider the risks and vulnerabilities identified through the findings of the 2018 Insurance Stress Test and are addressed to the National Competent Authorities (NCAs). As a first step, EIOPA analysed the 2018 Insurance Stress Test results at individual group level and, as a second step categorised the Recommendations.

The Recommendations consider the risks and vulnerabilities identified through the findings of the 2018 Insurance Stress Test and are addressed to the National Competent Authorities (NCAs).

As a first step, EIOPA analysed the 2018 Insurance Stress Test results at individual group level and, as a second step categorised the Recommendations as follows: 

• Supervisory convergence and financial stability (Recommendations 1 - 3) - EIOPA highlights the need to strengthen the supervision of the affected groups and requests the NCAs to review and, where necessary, to challenge capital and risk management strategies of those groups. Furthermore, NCAs should require groups to identify the range of possible management actions, assess whether these actions are realistic and consider potential second-round effects.
• Efficiency and enhancing the stress test exercise process (Recommendation 4) - EIOPA requests NCAs to check the adequacy and flexibility of systems and risk models used by groups for stress testing. Furthermore, for future stress tests NCAs should ensure sufficient resources.
• Cross-sectoral coordination (Recommendation 5) - EIOPA calls upon NCAs to enhance cooperation and information sharing with relevant authorities, such as the ECB Single Supervisory Mechanism and/or other national supervisory authorities of affected insurers that are part of a financial conglomerate.

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