Using financial stress tests technique in measuring the ability of insurance companies to withstand financial shocks

Financial Stress tests are one of the modern technique for measuring the amount of financial risks that could threaten the activities of financial institutions especially insurance companies and measure the extent to which these institutions are able to bear these risks, in light of the current global changes, whether at the economic, politics or health levels.
Financial stress tests affect many important decisions and policies of insurance companies, such as strategic planning decisions, investment decisions, underwriting policies, reinsurance policies, reserves, and capital planning.
The study aimed to use financial stress tests and scenario analysis to determine and measure the ability of insurance companies in the Egyptian insurance market to bear sudden financial risks that could threaten these companies and affect their progress. By applying scenario analysis & some statistical models using (Spss., Stat graphics)
The researcher concludes that Most of the insurance companies in the Egyptian insurance market are able to withstand only the initial shock of moderate severity. Also conclude that: There is a significant difference in the indicators and results of the stress test among insurance companies in under study.
The study recommended that Egyptian Financial Regulatory Authority & Insurance Federation of Egypt are Required to oblige insurance companies to conduct financial stress tests periodically; at least once a year .