EIOPA’s Insurance Stress Test Exercise 2018

In May, the European Insurance and Occupational Pensions Authority (EIOPA) launched its fourth stress test exercise for the 42 largest insurance groups in the European insurance sector. The 2018 EIOPA stress test exercise aims to assess the vulnerability of the EU insurance sector and comprises three specific hypothetical adverse scenarios which are informed by current market conditions, the risk climate and their potential impact on the insurance sector.

This paper looks into the three stress scenarios, the calculation methodology requirements, reporting timeframes, and disclosure requirements, whilst highlighting why non-participating insurers may find the exercise and the subsequent results of interest.