Risks in the European insurance sector are stable, generally average, with pockets of vulnerability arising from market volatility and real estate price movements. The European Insurance and Occupational Pensions Authority (EIOPA) notes such data on its website in its Insurance Risk Dashboard for January 2025, published on January 31.
According to the report, macroeconomic risks remain stable, at a medium level, GDP growth and inflation forecasts are also stable. Geopolitical tensions are changing the global dynamics, heightening concerns about reduced international cooperation and escalating risks and uncertainty in the years ahead.
Market risks remain at their highest levels. While bond volatility has stabilized, it remains above historical standards. Liquidity and funding risks are at medium levels but are trending upwards due to the gradual increase in risks across various metrics over the past year and the deterioration in funding conditions in the fourth quarter of 2024.
At the same time, solvency and profitability risks remain at an average level. Solvency ratios for insurance groups and solo companies in the insurance segment other than life insurance showed a slight improvement in the third quarter of 2024, remaining largely unchanged for life insurance companies.
Credit risk, insurance risks, market perception, even interconnection and imbalance risks are rated at average levels.
This Solvency II-based insurance risk dashboard summarizes the main risks and vulnerabilities in the European insurance sector through a set of risk indicators for the third quarter of 2024 and the end of 2023. The data is based on financial stability and prudential reporting collected from 93 insurance groups and 2,153 individual insurance companies. The Solvency II information is supplemented by market data with a deadline date of end-December 2024.
