European insurers' exposures to macro risks remain at a high level

Written by Adam Cadle

03/11/2021

European insurers’ exposures to macro risks remain at a high level, EIOPA has said.

The Authority's latest Risk Dashboard based on Solvency II data from Q2 2021 said inflation forecasts have been revised upwards. Unemployment rates are still elevated but on a decreasing trend. Financial markets have stayed broadly stable, amid fiscal and monetary support.

Overall profitability indicators and solvency positions for insurance groups continued improving in the second quarter of 2021. Insurance risks continued at a medium level, with year-on-year premium growth for non-life and life undertakings increasing for the second consecutive quarter. Market perceptions remain at a medium level.

The environmental, social and goverance (ESG) related risks, published for the first time in the October 2021 Risk Dashboard, are at a medium level, with transaction and physical risks slightly improving. The catastrophe loss ratio decreased compared to the previous quarter, albeit not yet reflecting the potential negative impact of the European floods events in summer 2021.

This Risk Dashboard based on Solvency II data summarises the main risks and vulnerabilities in the European Union insurance sector through a set of risk indicators of the second quarter of 2021 complemented with market data and other available information. Solvency II data is based on financial stability and prudential reporting collected from 99 insurance groups and 2741 solo insurance undertakings.

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