The European Insurance and Occupational Pensions Authority (EIOPA) has identified enhancing resilience in a structurally evolving and volatile risk environment and supporting societal resilience by mitigating conduct risks in business models and distribution as two European Union (EU)-wide strategic supervisory priorities relevant for national competent authorities (NCAs).

Publishing its report on the subject, EIOPA noted that this 2027-2029 cycle is grounded in its strategy towards 2030, through which EIOPA aims to strengthen societal resilience in Europe by ensuring the stability and sustainable development of the EU's insurance and occupational pensions sectors.

This goal comes at a time when demographic pressures, natural catastrophes, and digital vulnerabilities are becoming “increasingly acute”.

The report said that the European Economic Area insurance sector will operate in a structurally more complex, interconnected, and volatile environment in 2027-2029, with the possibility that several risks will occur at the same time and reinforce each other.

These risks include macroeconomic and geopolitical uncertainty, profitability pressures, growing interconnectedness, climate change, artificial intelligence (AI) and digitalisation, cyber risk, and consumer/conduct risk.

Given this environment, EIOPA suggested there must be strong capital and liquidity resilience, forward-looking underwriting and climate risk management, robust digital operational resilience, as well as close monitoring of AI-driven conduct risks.

It stressed the importance of understanding how business models change, respond, and adapt to current and emerging risks.

The report also said that for 2027 in particular, EIOPA and NCAs shall pay supervisory attention to two focus areas.

These are continuity and contingency planning, including digital operational resilience, and supporting societal resilience by mitigating conduct risks in business models and distribution.

For EIOPA, the first focus area means continuing discussions in the College of Supervisors while supporting NCAs, especially in the context of the volatile macroeconomic environment, as well as launching a questionnaire to collect evidence-based insights regarding the use of AI by (re)insurance undertakings and AI risks and following discussions on cyber risk.

The second focus area means it will continue discussions and sharing practices, leveraging the established European operational structure and its participation in the College of Supervisors.

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