The European Insurance and Occupational Pensions Authority (EIOPA) published its Risk Dashboard based on the third quarter of 2020 Solvency II data.
The results show that insurers’ exposures to macro risks decreased from very high to high level, while all other risk categories remain at medium level. Going forward, European supervisors expect an increase in credit, market and underwriting risks over the next 12 months, reflecting concerns over second lockdowns due to new waves of the pandemic as well as potential cliff effects once fiscal support measures will be over.
With regards to macro risk, Gross Domestic Product (GDP) growth forecasts, amid upward revisions, show the strongest expected decline in the last quarter of 2020 and the first recovery in the second quarter of 2021. However, potential cliff effects have to be considered in the future. The registered unemployment rate remained at the very high level in September. The 10 year swap rates decreased reaching new lows. Fiscal balance deteriorated as a consequence of the supporting fiscal packages by governments.
Read more at EIOPA’s website.