• (p3) - Third, as noted repeatedly by EIOPA, the ESRB and market analysts, scenarios involving multiple failures may be the result of common vulnerabilities to asset stresses and simultaneous prolonged low interest rates (i.e. the risk of a double hit).
  • The EIOPA 2014 stress test shows that EU life insurers are vulnerable to this risk due to rigid guaranteed returns and maturity mismatches.
  • Multiple failures of life insurers may impose losses on households and may result in asset fire sales by insurers, disruption to securities lending and derivatives markets, or even government bailouts.
  • Preventive measures have been taken to mitigate the risks arising from prolonged low interest rates and the effects of these still need to be monitored.

2015 12 - ESRB - Report on systemic risks in the EU insurance sector, Annex 3, Sources of systemic risks - 92p