Stress testing ‘must not be used as parallel to SII and lead to amplification of capital requirements’

Written by Adam Cadle

30/10/2019

Insurance stress testing must not be used as a parallel to SII and should not be designed or used in a manner which leads to an amplification of capital requirements, Insurance Europe has said.

In its response with the CFO and CRO Fora to a consultation by EIOPA on its discussion paper on methodological principles of insurance stress testing, Insurance Europe has called for the approach, scope and specifications of future exercises to be proportionate to its objective. It has requested a recued frequency of exercises and improvements in the planning and timelines to alleviate the burden on industry.

Further standardisation of some operational aspects and extended use of insurers’ existing tools and expertise were also suggested as improvements.

Finally, the industry reiterated that the calculation of the post-stress solvency capital requirement is not necessary to achieve EIOPA’s financial stability mandate and that the results of stress test exercises should continue, as in previous years, to be published at aggregate level.

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