EU Preparing for Climate Stress Test That Includes Insurers

The European Union is starting to prepare the region’s next stress test to measure the financial sector’s readiness for climate change, with the exercise set to involve the insurance industry for the first time.

The European Commission last week asked the relevant agencies to begin preparing the exercise, according to documents on the website of the EU’s insurance regulator EIOPA. The test, to be published by the first quarter of 2025, follows on from a similar test in 2022 which pitted banks against scenarios that were much gentler than many in the industry had feared.

“We need to be aware ...