EIOPA Launches the EU-wide Insurance Stress Test 2016
The European Insurance and Occupational Pensions Authority (EIOPA) launched today an EU-wide stress test for the European insurance sector. This regular exercise aims to assess insurers' vulnerabilities and is not being interpreted as a pass-or-fail test. It is designed to assess the resilience of the European insurance sector to severe adverse market developments based on a common analytical framework. Furthermore, this stress test will examine the potential increase of systemic risks in situations of stress.
The Stress Test 2016 focuses on two major market risks: the prolonged low yield environment and the so-called "double-hit", i.e. a negative market shock to asset prices combined with a low risk free rate . The exercise focuses on long-term business performed by solo undertakings (no insurance groups).
In order to include a higher number of small and medium size insurers, the participation target was increased from a 50% share in 2014 to a 75% share of each national market in terms of gross life technical provisions. The Stress Test 2016 is using the Solvency II framework and harmonized reporting requirements. Its reference date is 1 January 2016.
The deadline for submission of results to the national competent authorities (NCAs) will be 15 July 2016. The EU-wide results of the stress test will be disclosed in December 2016 in an anonymized and/or aggregated way.
EBA publishes final Guidelines on stress tests for deposit guarantee schemes
The European Banking Authority (EBA) published today its final Guidelines on stress tests for deposit guarantee schemes (DGSs). The Guidelines provide a systematic methodology for planning, running and reporting on stress tests conducted by DGSs to assess their resilience to various types of scenarios in times of banking stress. In line with the Deposit Guarantee Schemes Directive (DGSD), these Guidelines will promote the quality and the consistency of these stress tests. The resulting data will also facilitate future peer reviews by the EBA, contributing to a safe and sound EU framework for the benefit of depositors and financial stability.
The Guidelines lay down basic methodological principles for all stress tests run by DGSs in the EU, including the various stages to be completed, the scenarios simulated and the areas and indicators to be measured. In addition, they establish a small core of harmonised priority tests to be run by DGSs and reported to the EBA with a view to running a comparable EU-wide peer review. The first stress test should take place by 3 July 2017.
With a view to contributing to the first EBA peer review foreseen in 2020, DGSs should test a broad range of operational and funding capabilities, which will cover key areas and main functions activated when a DGS intervenes. DGSs will be requested to report their results on these priority tests by 3 July 2019. The results should provide information for a first meaningful EU-wide overview of the resilience of DGSs.
Stress Tests For Insurance Companies, Deposit Guarantee Schemes Announced
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