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EIOPA to launch second stress test on insurance sector across Europe

The European Insurance and Occupational Pensions Authority (EIOPA) is preparing to launch the second Europe-wide stress test for the insurance sector.

EIOPA said that the stress test will be conducted in cooperation with the European Systemic Risk Board (ESRB) and the respective national supervisory authorities including the Swiss FINMA.

According to the EIOPA, the initiative is based on a request of the EU Economic and Financial Committee (EFC) and is being coordinated with the stress test being undertaken by the European Banking Authority (EBA) within the European System of Financial Supervisors (ESFS).

The test will be targeted towards the European insurance sector and will include a minimum of 50% of insurance companies per country measured by gross premium income.

To conduct the stress test, EIOPA is seeking the cooperation of the European insurance industry.

Currently, EIOPA is preparing a stress test proposal including the scope of the exercise, framework and economic scenarios under which the financial positions will be tested.

The test is expected to be launched at the beginning of the second quarter of 2011.

The test helps EIOPA to understand capital positions of insurers and insurance groups in adverse situations.