EU. EIOPA highlights key risks for the insurance and pension sectors
The European Insurance and Occupational Pensions Authority (EIOPA) published today its December 2021 Financial Stability Report. The analysis underpinning the report examined key macroeconomic developments and the prevalence of risks that are key for the insurance and pension sectors.
On the macroeconomic side, the COVID-19 pandemic continues to pose a challenge to European economies. Uncertainties relating to the path of the pandemic and supply chain disruptions weigh on the growth outlook.
Despite the recent pick-up in long-term yields, markets still operate in a low interest rate environment, which puts pressure in particular on life insurers and pension funds.
Inflation, for the time being, remains elevated. Most forecasts, however, expect inflationary pressures to be transitory and foresee inflation moderating in the course of 2022. Were inflation to persist, it could prove to be a significant source of risk for non-life insurance, negatively affecting their profitability through the potential coverage of claims in real terms.
Macroeconomic developments in the months to come will therefore be a crucial factor for the risk assessment of the European insurance and pension sectors.
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