The Estonian insurance market is at an average level according to the EIOPA stress test
According to the results of the pan-European stress test published by the European Insurance and Occupational Pensions Authority (EIOPA), the readiness of Estonian insurers to launch the new capital regulation Solvency II is at a good average level compared to other European countries.
The stress test was used to assess the resilience of the European insurance sector in the event of various future scenarios, including the persistence of low interest rates. The test was carried out to assess the implementation of the Solvency II insurance regulation that will enter into force in 2016 and to map the impact of the scenarios. The stress test was mainly used to analyse the sustainability of the insurers’ activities in the conditions of an unfavourable financial market and in the event of an increase in insurance risks. The methods and conditions of the test were developed by the EIOPA.
225 groups of insurers and insurance companies from 28 European Union Member States and Norway took part in the stress test. Three life insurance companies operating in Estonia took part in the test directly and four insurers participated via their insurance groups.
The test results indicated that as at 31 December 2013, the solvency capital requirements stipulated with Solvency II were covered with suitable own funds in the Estonian insurance sector. The scenario that will have the biggest impact on the Estonian life-insurance companies that took part in the test is the long duration of the low-interest environment.
The Financial Supervision Authority will consider the results of the stress test when planning its activities and when giving direction to insurers about the performance of the standards that will enter into force in a year’s time.
The Financial Supervision Authority deals with capital and service supervision on the regulated insurance, banking and securities market.
The results of the stress test are accessible on the EIOPA homepage.