On 1 August, EIOPA published its Risk Dashboard based on SII data for Q1 of 2022. The results show that insurers’ exposures to macro, market and digitalisation risks are currently the main concern for the insurance sector. The other risk categories, such as underwriting as well as profitability and solvency risks stay at medium levels.
- Macro-related risks remain a key source of concern. Forecasted GDP growth at global level further decreased until Q2 2023, while inflation forecasts for main geographical areas remain high. Central banks are adjusting their instruments: the global average policy rate increased while asset purchases continue at a slower pace and will further slowdown. 10-year swap rates increased across currencies.
- Market risks are currently at a high level. Volatility in the bond market increased and remained at high levels in equity markets. Property prices showed a slight further increase. Credit risks remain relatively moderate, but CDS spreads further increased.
- Profitability and solvency risks remain at medium level. Given the increasing trend of interest rates since the beginning of the year, the solvency position of life undertakings rose, while the solvency position of groups dropped. Insurance risks remained at medium level in Q1-2022.
- Market perceptions remain at medium level. Non-life insurance stocks slightly outperformed the stock market, while life stocks returns were in line. The ratings of insurers haven’t change.
- Climate risks remain at medium level. Insurers slightly increased the share of green bonds in their assets portfolio, while their ratio of investments in green bonds of the entire green bond universe slightly decreased.
- Digitalisation and cyber risks are at a high level. The materiality of these risks for insurance as assessed by supervisors increased given the resurgance of cyber security issues and concerns of a hybrid geopolitical conflict.
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Insurance Europe