Insurance Industry Flags Stress Test Format as 'Overly Burdensome'

The UK's insurance industry has given feedback to the Bank of England's Prudential Regulation Authority (PRA) after completing its first 'dynamic' stress test, known as DyGIST. The test, which ran for three weeks in May, threw five compounding catastrophe and cyber scenarios at participating insurers without advance warning. Industry voices have told the regulator that the pace and scale of the test went too far.

Nafisah Hussain, director of public policy at the International Underwriting Association, said firms were asked to absorb an unlikely pile-up of catastrophes in a tight window. She warned that running such demanding tests regularly risks becoming 'overly burdensome' for firms without giving regulators much extra insight.

The regulator has confirmed it will publish its findings from the exercise before the end of the year, and says feedback on resourcing and proportionality will feed into any review of how - or whether - DyGIST runs again. The PRA has defended the design, saying the aim was to examine how the sector's response and resilience holds up when shocks are spread out over time.