The European Insurance and Occupational Pensions Authority or EIOPA Sunday released results of its "stress test" which showed that the insurance sector is more vulnerable to a "double hit" stress scenario that combines decreases in asset values with a lower risk free rate.
The results revealed the insurance sector is in general sufficiently capitalized in Solvency II terms. Fourteen percent of companies, representing 3 percent of total assets, have a Solvency Capital Requirement or SCR ratio below 100 percent.
In a prolonged low yield scenario, 24 percent of insurers will not meet their SCR and some companies may face problems in meeting their promises in 8-11 years' time.
As a follow up to the stress test, the EIOPA issued a set of recommendations to NSAs to address the identified vulnerabilities in a coordinated way.
"NSAs are recommended to engage with companies to ensure that they have a clear understanding of their risk exposures and their vulnerability to given stress scenarios and that they have the capacity to take recovery actions if those vulnerabilities materialise," a statement from EIOPA said.
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May 08, 2026 15:50 ET Manufacturing and services sector survey results and labor market data from main economies were the highlight on the economics news front this week. Factory orders and jobs report dominated the news flow in the U.S. Similarly, industrial production data from German garnered attention in Europe. In Asia, purchasing managers’ survey results from China and the central bank decision from Australia were in focus.