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European stress test to be run in the insurance sector in december 2009

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CEIOPS’ Members endorsed in today’s meeting the proposal to run a EU-wide stress test in the insurance sector in December 2009.

CEIOPS will continue to develop the exercise in close cooperation with the industry representatives aiming to deliver it’s findings to the EU political level at their meetings to be held throughout the first quarter of 2010.

The objective is an EU-wide exercise with common guidelines and scenarios, so as to increase the level of aggregate information among policy makers in assessing the European insurance sector’s potential resilience to shocks and to contribute to the convergence among supervisory practises.

The EU-wide stress test for the insurance sector will be conducted in December 2009 for large and important insurance groups in Europe. Three scenarios will be tested. An adverse scenario mirroring the development of capital markets between end- September 2008 and end-September 2009. The second scenario reflects a more severe and prolonged recession and the third scenario reflect a situation of inflation picking up rapidly leading to a steep rise in interest rates. The stress test will focus on market and credit risks.
On 5 November 2003, the European Commission adopted the decision, to establish the Committee of European Insurance and Occupational Pensions Supervisors, which entered into force on 24 November 2003. Today this decision is repealed and replaced by Decision 2009/79/EC. The Committee is composed of high level representatives from the insurance and occupational pension funds supervisory authorities from the EU and EEA Member States, chaired by Gabriel Bernardino, who is supported by a Vice Chair and four other members in a Managing Board.

CEIOPS fulfils the functions of the Level 3 Committee for the sector of insurance and occupational pensions in application of the Lamfalussy Process. This includes in particular: Providing advice to the European Commission, in particular in its preparation of draft implementing measures in the fields of insurance, reinsurance and occupational pensions, contributing to the consistent implementation of community legislation in the Member States and improving co-operation among Supervisory Authorities, including the exchange of information on supervised institutions.