EU insurers escape noose on Russian investments; but spill-over risks lurk, regulator warns

European insurers may be largely clear of Russian investment exposure, but spillover effects from the Russian invasion of Ukraine and ensuing sanctions bring new risks meriting supervisory vigilance, Europe's top regulatory body for the industry, the  European Insurance and Occupational Pensions Authority (EIOPA), has said.

"While the direct effect on entities’ financial stability is not substantial at the moment, second-round effects from the real economy and spillovers from other parts of the financial sector could nevertheless become a potential source of risk," EIOPA said in a statement for Intelligent Insurer.

" EIOPA is therefore closely monitoring the developments and analysing the impact for the insurance and pension sector."

The direct impact on financial stability is "not substantial at the moment" with overall investment exposure to Russian assets at less than 0.1% of total holdings, EIOPA said of its end-year 2021 data. Subsequent disposals may already have undercut that sum.

Technical provisions in Russia by EEA-domiciled insurers are also "very limited" and "related risk is contained," EIOPA said.

European insurers should work towards a "quick and proper" implementation of sanctions and "intensively" work on cyber risk management, EIOPA adds.

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