Stress test to begin in the second quarter
EU authorities are gearing up for stress test on insurers later this year.
The European Insurance and Occupational Pensions Authority (EIOPA) said it would be done together with the European Systemic Risk Board and the local regulators of EU countries, beginning in the second quarter of the year.
"The goal of the stress test is to identify and quantify the impact of the different stress scenarios on an insurer's financial position in an adverse and very severe economic environment," EIOPA said in a statement.
An ABI spokesman said: "Stress tests in the banking system may well be appropriate, particularly in the light of the continuing financial problems faced by that sector.
"As regards insurance, it will be important to design any such tests in a way which recognizes the long-term nature of the businesses they run and the fact that they do not face the same short term liquidity or credit issues as banks. Insurance is different from banking and any stress tests must reflect this reality.”.
