Members of the International Underwriting Association are taking part in a live stress test exercise designed to assess the resilience of the London insurance market under extreme crisis scenarios.
The Dynamic General Insurance Stress Test, run by the Prudential Regulation Authority throughout May, examines how insurers respond to fast-moving events, with a focus on balance sheet impacts and decision-making processes.
Scenarios include a systemic cyber attack, a global financial downturn, major natural catastrophes, and a large windstorm. There are also a series of reinsurance stress tests.
Nafisah Hussain, director of public policy at the IUA, said: “What makes the DyGIST exercise different is that it is a genuinely live test. Both the PRA team and the London Market firms taking part were not aware of the test scenarios in advance and are responding in real time. Stress tests are designed to examine the extreme boundaries of probability and this one does exactly that.”
The IUA is planning to work with members and the PRA to review lessons learned following the conclusion of the exercise.
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