Macro, markets and digitalisation risks European insurers’ top concerns

Written by Adam Cadle

07/11/2023

European insurers’ exposures to macro, market and digitalisation risks are currently at a high level and the main concern for the sector, EIOPA’s latest Insurance Risk Dashboard has said.

Macro risks remain among the most relevant for the insurance sector as global GPD growth forecasts for the next four quarters deteriorated and the credit-to-GDP gap turned more negative according to September data. Credit risks continue at a medium level without major changes, while market risks remain prominent given elevated volatility in bond markets and increased volatility in equity markets.

Liquidity and funding risks remain stable, with the median liquid assets ratio slightly improving in the second quarter of 2023. Bond issuance and catastrophe bond issuance increased. Profitability and solvency risks moderated slightly as key performance indicators such as the return on assets, return to premiums and return on the excess of assets over liabilities all showed improvements in H1 2023.

ESG risks stabilised at a medium level as insurers’ median ESG rating score remained unchanged in 2022 around A-. The median exposure towards climate relevant assets hovers around 3% of total assets in Q2 2023., while insurers’ investments in green bonds decreased compared to the previous quarter.

Digitalisation and cyber risks increased to a high level and are expected to further increase according to the assessment of supervisors.

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