Insurance Regulatory eBulletin - EIOPA

EIOPA expects insurance undertakings to avoid instruments banned or restricted by ESMA
On 1 June, EIOPA published a statement that it expects insurance undertakings to avoid any potential customer detriment resulting from exposing policyholders to investments in contracts for differences (CFDs) and binary options. EIOPA noted that the European Securities and Markets Authority (ESMA) has adopted temporary product intervention measures on the provision of CFDs and binary options to retail investors in the EU, including a prohibition on the marketing, distribution or sale of binary options and several restrictions on the marketing, distribution or sale of CFDs to retail investors.

EIOPA’s expanded set of Solvency II statistics on the European insurance sector
On 21 June, EIOPA published a new set of statistical information on the European insurance sector based on Solvency II regulatory reporting for the fourth quarter of 2017. In addition to the regular statistics, for the first time EIOPA is publishing new exposure statistics on the sector. This new data contains:

  • detailed statistics on types of exposure as well as location of exposure both at European Economic Area and individual country level;
  • clear asset classifications including government bonds, commercial bonds and equity;
  • real estate exposures with a distinction between commercial and residential exposures;
  • raw aggregated exposure data to enable more in-depth analysis by end-users.
This new exposure data will become a regular part of the EIOPA insurance statistics which can be accessed via EIOPA's website.

EIOPA’s June 2018 Financial Stability Report outlines key financial stability risks
On 25 June, EIOPA published its June 2018 Financial Stability Report of the (re)insurance and occupational pensions sectors in the European Economic Area. The persistent low yield environment remains the main risk for both the insurance and pension fund sector. However, new types of risks are emerging with the onset of climate change and rapid technological developments increasing the cyber risk in the sector.

The report concludes that overall the insurance sector continued to show robust results in 2017. Insurance companies are on average adequately capitalised and deliver positive profitability despite the low yield environment. The Solvency Capital Requirement ratio for the median company is 223% for the life and 207% for the non-life insurance sectors, although there are significant disparities across both undertakings and countries.

The reinsurance industry, also, appears to have sufficient capital to absorb global insurance industry catastrophe losses that were considerably higher in 2017 than the long-term average. However, the impact of the large insured losses on future reinsurance pricing is still uncertain.