The European Insurance and Occupational Pensions Authority (EIOPA) published today its January 2025 Insurance Risk Dashboard, which shows that risks in the European insurance sector are stable and overall at medium levels, with pockets of vulnerabilities stemming from market volatility and shifts in real estate prices.
Macroeconomic risks remain stable at a medium level, with GDP growth and inflation forecasts holding steady. Geopolitical tensions are reshaping global dynamics, heightening concerns about declining international cooperation and escalating risks and uncertainties in the years to come.
Market risks remain at a high level. While bond volatility stabilised, it remains above historical standards.
Liquidity and funding risks are at a medium level but with an upward trend due to a gradual increase of risks across various indicators over the last year and the worsening of funding conditions in Q4 2024.
Solvency and profitability risks are unchanged at a medium level. Solvency ratios for insurance groups and solo undertakings in the non-life segment showed a slight improvement in Q3 2024, while remaining largely unchanged for life undertakings.
Credit risk, insurance risks, market perceptions as well as interlinkages and imbalances risks are all assessed at medium levels.
With regard to ESG related risks, the outlook for the next 12 months is pointing to an increase in risks as growing skepticism and evolving dynamics in environmental agreements make it more challenging to ensure consistent progress towards long-term sustainability goals.
Supervisors have also noted a slight increase in trend regarding digitalisation and cyber risks in Q4 2024, driven by the higher perceived probability of these risk materialising.
Background
This Insurance Risk Dashboard, based on Solvency II data, summarises the main risks and vulnerabilities in the European insurance sector through a set of risk indicators from the third quarter of 2024 and end-2023. The data is based on financial stability and prudential reporting collected from 93 insurance groups and 2153 solo insurance undertakings. The Solvency II information is complemented with market data with cut-off date end-December 2024.