April 2025 Insurance Risk Dashboard

Please note that the cut-off date for market data is end-March, hence any market developments occurred after this date are not reflected in the indicators of this Dashboard.

The reference date for company data is Q4-2024 for quarterly indicators and 2023-YE for annual indicators. The cut-off date for most market indicators is the end of March 2025. The Level (color) corresponds to the level of risk as of the reference date, the Trend is displayed for the 3 months preceding the reference date and the Outlook is displayed for the 12 months after the reference date. The latter is based on the responses received from 23 national competent authorities (NCAs) and ranked according to the expected change in the materiality of each risk (substantial decrease, decrease, unchanged, increase and substantial increase).

Key Observations

Macro Risks

Macroeconomic risks remain stable at a medium level, but with an increasing outlook. GDP growth projections across major geographical regions slightly decreased to 1.1% (from 1.2%) for the next four quarters and global inflation forecasts slightly increased to 2.2% (from 2.1%). In parallel, average monetary policy rates across major currencies continued to decline marginally, and the contraction of major central banks’ balance sheets continue to slow down. The weighted average of 10-year swap rates for key currencies increased relative to the prior quarter (from 2.6% to 2.9%). Fiscal balances for major economies improved from -3.7% in Q2 2024 to -3.2% in Q3 2024, while the credit-to-GDP gap decreased from -16.7% to -18.2%. Unemployment rates are broadly stable based on the most recent data from Q4 2024. Looking ahead, uncertainty surrounding U.S. security guarantees and commitment to free trade marks a paradigm shift, which could significantly impact the broader macroeconomic landscape. Following recent announcements, the first week of April saw a steepening of the EUR swap curve, driven by declining yields at the short end—possibly reflecting market expectations of upcoming monetary policy decisions. Meanwhile, a potential increase in defence spending is likely to weigh on fiscal balances in the periods ahead.

Note: Average of forecasts four quarters ahead, weighted average for Euro area, United Kingdom, Switzerland, United States, BRICS.
Source: Bloomberg Finance L.P.

Note: Weighted average for EU, UK, Switzerland, United States, China.
Source: Refinitiv

Note: Weighted average for EU, UK and United States.
Source: Refinitiv

Note: Average of forecasts four quarters ahead, weighted average for Euro area, United Kingdom, Switzerland, United States, BRICS.
Source: Bloomberg Finance L.P.

Note: Weighted average for EUR, GBP, CHF, USD.
Source: Refinitiv

Note: Weighted average for Euro area, United Kingdom, Switzerland, United States, China.
Source: BIS

Note: Weighted average for Euro area, United Kingdom, Switzerland, United States.
Source: Bloomberg Finance L.P.

Credit Risks

Credit risks remain steady at a medium level. As of end of March 2025, credit default swap (CDS) spreads for government and spreads for financial unsecured remained broadly stable and non-financial corporate bonds narrowed slightly, while spread for financial secured somewhat increased. In Q4 2024, insurers’ median exposures to financial unsecured and to non-financial bonds remained broadly unchanged, while their exposures to government bonds and to financial secured bonds slightly . As of Q4 2024, insurers’ median investment allocations as a share of total assets stood at approximately 26.6% in government bonds, 9.5% in financial unsecured bonds, 1.6% in financial secured bonds, and 9.7% in non-financial bonds. The indicator on fundamental credit risk in the non-financial corporate sector slightly increased, based on Q3 2024 data. Insurers’ exposure to mortgages and loans remains low and the household debt-to-income ratio in the Euro area declined slightly to 83.6%, based on Q3 2024 data. Overall, the credit quality of insurers’ investments remains high, with the median credit quality step (CQS) around 2, equivalent to an AA rating from S&P. The median share of low-rated investments (CQS > 3) slightly increased to 1.3% in Q4 2024. In the beginning of April 2025, corporate and sovereign bond speads increased as investors reassessed risk premiums across asset classes.

Note: Left scale shows the distribution of exposures (inter-quartile range and median), right scale the risk measure.
Source: Refinitiv, QFG

Note: Left scale shows the distribution of exposures (inter-quartile range and median), right scale the risk measure.
Source: Bloomberg Finance L.P., QFG

Note: Left scale shows the distribution of exposures (inter-quartile range and median), right scale the risk measure.
Source: QFG, ECB

Note: Distribution of indicator (interquartile range, median).
Source: QFG

Note: Distribution of indicator (interquartile range, median). Includes both internal and external credit ratings.
Source: QFG

Note: Correlation between the debt-service ratio of non-financial corporates and the spread of non-financial corporate bonds based on a 12-quarter rolling window.
Source: BIS, Bloomberg Finance L.P.

Market Risks

Market risks remain elevated, with upward risk outlook. Bond market volatility and equity volatility increased compared to the previous quarter. Insurers’ median exposure to bonds slightly increased to 52.3% and equities remained broadly stable at 5% of total assets in Q4 2024. Meanwhile, real estate prices reverted to a downward trend, while insurers’ exposure to property remains limited overall, with a median of 3% of total assets. Asset concentration measured by the Herfindahl-Hirschman Index is stable. The median duration mismatch remained broadly stable from 2023 to 2024 around -5, when considering both the modified duration of assets and liabilities. In the beginning of April 2025, markets reacted stronlgy following the new US tariffs announcements on trade of goods. While markets have settled somewhat, persistent policy uncertainty and escalation remain sources of extreme risks making further assets correction likely.

Note: Left scale shows the distribution of exposures (inter-quartile range and median), right scale the risk measure.
Source: Bloomberg Finance L.P., QFG

Note: Left scale shows the distribution of exposures (inter-quartile range and median), right scale the risk measure. The growth of real estate prices is based on a weighted average of commercial and residential real estate prices.
Source: QFG, ECB

Note: Distribution of indicator (interquartile range, median). The numerator of the investment return ratio excludes Solvency II reported unrealised gains and losses.
Source: ARS

Note: Herfindahl Hirschman index computed on six balance sheet asset classes (government bonds, corporate bonds, equities, property, cash and cash equivalents and loans and mortgages). Distribution of indicator (interquartile range, median).
Source: QFG

Note: Distribution of indicator (interquartile range, median). EIOPA calculates the indicator based on the modified duration of the assets and the liabilities.
Source: Assets: QFG, Liabilities: AFG

Liquidity & Funding

Liquidity and funding risks remained at medium level. In Q4 2024, insurers’ median cash holdings remained broadly steady at around 0.7% of total assets, and the median liquid asset ratio increased from 46% to 47% of total assets. In contrast, insurers’ lapse rates kept slightly increasing from 4.7% to 5% in 2024. Even though some entities saw a slight decrease in lapses, overall they remain at high level. The latest annual data indicates an overall positive cash flow position in 2023, measured by the ratio of net cash flows to liquid assets. In the catastrophe bond market, the issuance volumes increased in Q4 2024 and the multiplier (spread/expected annual loss) remained broadly stable. On the derivative side, although the insurance sector seemed to have been resilient in addressing liquidity needs so far, effective management remains crucial to navigate potential new market shocks.

Note: Distribution of indicator (interquartile range, median).
Source: QRS

Note: Distribution of indicator (interquartile range, median).
Source: QFG

Note: Distribution of indicator (interquartile range, median).
Source: ARS

Note: Volume in EUR mn.
Source: Bloomberg Finance L.P.

Note: Volumes in USD mn, spread in per cent.
Source: http://artemis.bm

Profitability & solvency

Solvency and profitability risks remain stable at a medium level. In Q4 2024, the median solvency ratios increased slightly for insurance groups (from 206.3% to 208.5%), decreased slightly for non-life (from 214.8% to 213.5%) and for life (from 230.5% to 216.0%). In terms of profitability, the median non-life combined ratio held steady at 97% in Q4-2024. Other profitability measures such as the return on assets and return to premiums increased and return on excess of Assets over Liabilities decreased compared to the previous assessment with regards to the median values.

Note: Distribution of indicator (interquartile range, median).
Source: QRS

Note: Distribution of indicator (interquartile range, median). The indicator excludes unrealised gains and losses. For information purposes, the median is also shown with the inclusion of unrealised gains and losses.
Source: ARS

Note: Distribution of indicator (interquartile range, median).
Source: QFG

Note: Distribution of indicator (interquartile range, median). Q2 figures annualised.
Source: QFG and ARG

Note: Distribution of indicator (interquartile range, median). Q2 figures annualized.
Source: QFG and ARG

Note: Distribution of indicator (interquartile range, median).
Source: QFG

Note: Distribution of indicator (interquartile range, median).
Source: QRS

Note: Distribution of indicator (interquartile range, median).
Source: ARS

Note: Distribution of indicator (interquartile range, median).
Source: QFG

Note: Distribution of indicator (interquartile range, median). Starting from 2023 and following the adoption of the new taxonomy, the frequency of the indicator will be annual.
Source: QRS

Interlinkages & imbalances

Interlinkages and imbalances risks remained stable at a medium level. Insurers’ median exposure to banks, other insurers and to other financial activities remained largely unchanged, respectively around 14.2%, 1.4% and 22.4% of total assets. Insurers’ median exposure to domestic sovereign debt and derivatives also held steady at around 7.8% and 0.3% of total assets, respectively. The share of premiums ceded to reinsurers was stable, with the median at 4.9% in Q4 2024.

Note: Distribution of indicator (interquartile range, median). Banks comprise all activities identified with NACE code K.64.1.9.
Source: QFG

Note: Distribution of indicator (interquartile range, median). Insurances comprise all activities identified with NACE code K65, excluding K65.3.
Source: QFG

Note: Distribution of indicator (interquartile range, median). Other financial institutions comprise all activities identified with NACE codes K66, K65.3 and K64 excluding K64.1.9.
Source: QFG

Note: Distribution of indicator (interquartile range, median).
Source: QRS

Note: Distribution of indicator (interquartile range, median).
Source: QFG

Note: Distribution of indicator (interquartile range, median). Derivatives holdings are calculated as the total value of derivatives from the balance sheet (i.e. both asset and liability values in absolute terms).
Source: QFG

Note: Distribution of indicator (interquartile range, median).
Source: QFG

Insurance Risks

Insurance risks remain stable at a medium level. Year-on-year premium growth for life increased to 14.5% (from 12.1%) on the back of increasing yields which makes insurance products more competitive. Year-on-year premium growth for non-life business also increased to 8.3% (from 7.4%). The gradual increase in non-life premium could be explained by a smoothen adaptation of pricing to the increase in inflation. The median of the loss ratio slightly decreased from 64.6% to 63.4% in Q4 2024.

Note: Year-on-year change in gross written premiums. Distribution of indicator (interquartile range, median).
Source: QFG

Note: Distribution of indicator (interquartile range, median).
Source: QRS

Market perceptions

Market perceptions remain at a medium level. As of end March 2025, life insurance stocks outperformed the market over the last three months. The median price-to-earnings ratio for insurance groups increased in the same period. The distribution of insurers’ CDS spreads slightly increased from the previous quarter, while there were three positive changes in external rating outlooks for insurance groups in the sample. At the beginning of April 2025, euro insurance stocks were impacted negatively, mirroring broader market trends.

Note: Out-(under-)performance over 3-month periods vs Stoxx 600.
Source: Refinitiv

Note: Distribution of indicator (interquartile range, median).
Source: Refinitiv

Source: Standard & Poor’s via Refinitiv

Source: Standard & Poor’s via Refinitiv.

ESG Related Risks

ESG-related risks remain stable at a medium level, though the outlook for the next 12 months is pointing to an increase in risk. In Q4 2024, the median exposure of insurers to green bonds, as a percentage of total corporate bonds, increased from 6.5% to 7%. The median exposure to climate-relevant assets slightly decreased (from 3.4% to 3.1% of total assets). The median ESG rating score for insurers in the sample remained unchanged in 2023, with positive developments on Environmental ratings and an overall unchanged picture for Social and Governance ratings. Regarding the indicators on climate physical risks, the exposure at risk to both flood and windstorm remained unchanged in 2023, with a notably higher exposure to windstorm risk. Evolving dynamics in environmental agreements are making it more challenging to mitigate risks and to ensure consistent progress toward long-term sustainability goals. The withdrawal of the US from the World Health Organization and from the agreements on climate undermine the achievements of future objectives in those fields, opening the door to more extreme pandemics and natural catastrophes. Larger losses stemming from these events will make their insurability not economically sustainable by the industry reducing the offer and increasing its cost.

Note: Distribution of indicator (interquartile range, median). Higher rating scores correspond to better ratings.
Source: Refinitiv

Note: Numbers of positive (light blue bar) and negative (dark blue bar) changes.
Source: Refinitiv

Note: Distribution of indicator (interquartile range, median).
Source: Refinitiv, QRS

Source: EIOPA new dashboard on insurance protection gap for natural catastrophes, Eurostat, Litpop, ARG.

Note: The six climate-relevant sectors (agriculture, fossil fuel, utilities, energy-intensive, transport and housing) are based on their greenhouse gas emissions and mapped at NACE Rev2 4-digit level. Due to data limitations, there are assets which cannot be entirely included in the “climate relevant” category and therefore they are currently excluded from the calculation of the indicator leading to a potential underestimation of the risk.
Source: QRS

Digitalisation & cyber risks

Digitalization and cyber risks remain at a medium level, with an increasing outlook. The materiality of these risks for the insurance sector, as assessed by supervisors, slightly increased in Q4 2024, driven by an increase in the perceived probability of risk materialization. Cyber negative sentiment slightly decreased during the same quarter. In the current geopolitical context, cyber threats are significant concern as insurers are not only exposed to operational risks but also face the growing challenge of underwriting cyber risks, which adds complexity to their risk management strategies.

Note: Scores compiled based on the assessment of probability and impact (lhs: scale from 1 to 4) of digitalisation & cyber risks from National Competent Authorities. The country average for each answer is then normalised (rhs: scale 0-100).
Source: EIOPA’s Insurance Bottom-up Survey.

Note: Text analysis based indicator, calculated from earning calls transcripts from listed insurers.
Source: Refinitiv, EIOPA calculations.

Note: Number of publicly disclosed global cyber attacks over time and changes.
Source: University of Maryland CISSM Cyber Events Database, EIOPA calculations.

APPENDIX

Arrows for the Trend show changes for the 3 months preceding the reference date, while arrows for the Outlook show expected developments for the next 12 months.

Description of risk categories

Macro risks

This category depicts developments in the macro-economic environment that could impact the insurance sector. This category is based on publicly available data on macro variables that may be used for broader macroprudential monitoring and analysis.

Credit risks

The category assesses the vulnerability of the insurance sector towards credit risks. To achieve this aim, credit-relevant asset class exposures of the insurers are combined with the relevant risk metrics applicable to these asset classes.

Market & asset return risks

The risk category depicts the main risks insurers are exposed to on financial markets and the level of asset returns and costs (e.g. administrative, investments and other). For most asset classes these risks are being assessed by analysing both the investment exposure of the insurance sector and an underlying risk metric. The exposures give a picture of the vulnerability of the sector to adverse developments; the risk metric, usually the volatility of the yields of the associated indices, gives a picture of the current level of riskiness.

Liquidity & funding risks

This category aims at assessing the vulnerability of the European insurance industry to liquidity shocks. The set of indicators encompasses the lapse rate of the life insurance sector with high lapse rate signaling a potential risk, holdings of cash & cash equivalents as a measure of the liquidity buffer available, and the issuance of catastrophe bonds, where a very low volume of issuance and/or high spreads signals a reduction in demand which could form a risk.

Profitability & solvency

The category scrutinizes the level of solvency and profitability of the European insurance industry. Both dimensions are analyzed for the overall industry (using group data) and include a breakdown for the life and non-life companies (using solo data). In detail, the solvency level is measured via solvency ratios and quality of own funds. Standard profitability measures for the whole industry are complemented by indicators such as the combined ratio and the return on investments specifically applied to the non-life and life industry respectively.

Interlinkages & imbalances

Under this section various kinds of interlinkages are assessed, both within the insurance sector, namely between primary insurers and reinsurers, between the insurance sector and the banking sector, as well as interlinkages created via derivative holdings. Exposure towards domestic sovereign debt is included as well.

Insurance (underwriting) risks

As indicators for insurance risks gross written premiums of both life and non-life business are an important input. Both significant expansion and contraction are taken as indicators of risks in the sector; the former due to concerns over sustainability and the latter as an indicator of widespread contraction of insurance markets.

Market perceptions

This category encompasses the financial markets’ perception of the healthiness and profitability of the European insurance sector. For this purpose, relative stock market performances of European insurance indices against the total market are assessed, as well as fundamental valuations of insurance stocks (price/earnings ratio), CDS spreads and external ratings/rating outlooks.

Digitalisation & cyber risks

This risk category aims to capture potential financial stability risks related to an increased digitalisation, which exposes the insurance sector to risks both from an operational resilience perspective (as insurers themselves can be targets of cyber-attacks) and from an underwriting perspective (related to the provision of cyber insurance products). The set of indicators encompasses the supervisors’ assessment of digitalization & cyber risks considering different aspects such as cyber security risks, cyber underwriting risks and Insurtech competition, the year-on–year change in the frequency of cyber incidents as reported in the Hackmageddon.com database and, finally, the negative sentiment of European insurers against cyber risk. This section will be further developed as new data becomes available.

Insurance Risk Dashboard

EIOPA-BoS-25-174

April 2025

April 2025 Insurance Risk Dashboard

Key Observations

Macro Risks

Credit Risks

Market Risks

Liquidity & Funding

Profitability & solvency

Interlinkages & imbalances

Insurance Risks

Market perceptions

ESG Related Risks

Digitalisation & cyber risks

APPENDIX

Macro risks

Credit risks

Market & asset return risks

Liquidity & funding risks

Profitability & solvency

Interlinkages & imbalances

Insurance (underwriting) risks

Market perceptions

Environmental, Social and Governance (ESG) related risks

Digitalisation & cyber risks