Finally, if the cyclical conditions turn out to be worse than expected, this would affect credit quality, leading to a higher share of loan losses. Against the backdrop of these risks, the Bank of Italy is conducting ad hoc studies focusing on issues such as credit, liquidity and refinancing.
Non-life insurers and reinsurers also bear the brunt of claims from property damage caused by storms. The 2018 EIOPA stress test showed that reinsurers are hit particularly hard by losses from natural disasters. Piling extra pressure on this sector. Events in other countries could also lead to higher foreign currency risks. And these effects cascade through the sector.