Low interest rates, poor markets and bonds are a danger

Insurers’ biggest risk is low or even decreasing interest rates as well as risks related to depressed equity markets and volatility of credit spreads on bond instruments, regulatory group CEIOPS has said.

A prolonged period of economic recession would be particularly challenging for the underwriting performance.

In 2009 solvency margins have slightly increased due to the recovery in financial markets. CEIOPS reports that most insurance firms’ solvency margins include sufficient shock absorption capacity helping them to get through the recession period.