The Bank of England (BoE) says it will check the health of general insurers in 2025 with a 'stress test' that includes a rapid series of shocks.

Regulators introduced stress tests following the 2008 financial crisis to check whether banks and insurers are holding enough capital by simulating "shock scenarios" to flag risks.

In a statement on Tuesday (4 October), the BoE's prudential regulation authority (PRA) said:

"The dynamic nature of the 2025 exercise represents a significant change from previous exercises and will involve simulating a sequential set of adverse events over a short period of time.

"The PRA intends to engage with the industry including trade bodies over the next six months, with a view to providing more details of this exercise, including participation, design, and timelines, during the first half of 2024."

The authority said a summary of the results will be provided at an aggregate industry level.

If successful, the next test in 2025 may help identify any practical issues that could arise from the scenarios, according to the Association of British Insurers.

The BoE said last month that it would publish insurer-by-insurer results in the test, a major change that will provide transparency that banks have long possessed.

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