The European Insurance and Occupational Pensions Authority (EIOPA) has launched its 2024 stress test in which it subjects insurers in the European Economic Area to a hypothetical scenario of severe but plausible adverse developments.
The 2024 stress test envisions a re-intensification or prolongation of geopolitical tensions and assesses how European insurers would cope with the wide-ranging economic and financial market consequences of such an event.
The goal is primarily to assess the resilience of the participants to the adverse scenario whose shocks go beyond the regular resilience required under Solvency II and provide supervisors with information on whether these insurers are able to withstand severe shocks. EIOPA will also analyze aggregate results to assess potential sector-wide vulnerabilities.
This microprudential approach will enable European and national supervisors to issue recommendations to the industry as a whole, and, where relevant, to discuss potential follow-up actions with individual insurers, to improve their resilience.
Participants will have until mid-August 2024 to calculate their results based on the prescribed scenario and submit them to the relevant national supervisor. Once the results are submitted, EIOPA will undertake a quality assurance process to validate the results, which is expected to last until end of October 2024. The outcome of the 2024 Stress Test will be published in December.
