Stress testing is an appropriate tool to identify vulnerabilities of the financial system and to assess the potential impact of risks on the stability of the financial system in general and the insurance sector more specifically. Stress testing also helps to identify those undertakings that may pose a risk to the stability of the financial system or the insurance sector. The National Bank of Belgium (NBB) can, after the analysis of the stress test results, issue recommendations to be implemented by the insurance undertakings in order to contribute to the stability of the financial system.

In 2017, the Belgian insurance sector is subject to a stress test consisting of two distinct parts. The first part is a bottom-up stress test focusing on the impact of a persistent low yield environment and is developed by the NBB (Low for Long scenario). The second part is the IMF FSAP stress test designed by the IMF in the context of its 2017 Belgian FSAP mission. It consists of a bottom-up stress test focusing on an increase of the asset risk premia due to adverse macrofinancial evolutions (IMF Adverse scenario), a sensitivity analysis based on single-factor shocks and a top-down stress test.

More details on the stress test scenarios and specifications can be found under the “Stress Test Specifications” section below.