The European Insurance and Occupational Pensions Authority (EIOPA) has launched an EU-wide stress test for the insurance sector aimed at testing the overall resilience of the insurance sector and to identify its major vulnerabilities. The results of the stress test analysis will be published in November 2014.

This test comprises of two modules:

  • the core module, which includes two adverse market scenarios covering financial asset stresses (sovereigns, corporate bonds and equities) as well as shocks to real estate asset prices and interest rate stresses; and
  • the second module, which addresses the impact of a low yield environment. It is a follow-up to EIOPA’s opinion on the supervisory response to a prolonged low interest rate environment.

The adverse market scenarios have been developed in co-operation with the European Systemic Risk Board. These scenarios, which have been approved by the General Board of the ESRB, highlight adverse conditions that are specific and relevant to each sector.

Simultaneous with the launch of the stress test, EIOPA has published technical specifications for the preparatory phase (Part 1 (EIOPA-14/209), together with an annex (EIOPA-14/211), and Part 2 (EIOPA-14/210)). The technical specifications will provide a ground for undertakings to value assets and liabilities and to calculate solvency or minimum capital requirements and own funds. EIOPA has also published a new webpage, together with a template for submitting questions to the relevant national competent authority.

Copies of the EIOPA stress test press release and updated webpage ; ESRB related press release containing the adverse scenarios sent to the EBA and EIOPA, EIOPA-14/209 and annex ; EIOPA related webpage , Q&A template and accompanying list are available.