Liquidity Stress Testing

Purpose

Liquidity Stress Testing helps simulate an insurer’s liquidity position under adverse market and operational conditions, including examples such as catastrophe events, interest rate shocks, and delayed reinsurance recoveries. Its purpose is to assess liquidity resilience under different shocks and support automated reporting of stress test outcomes.

Primary users

The primary user is not specified. The provided context indicates the agent is intended for an Insurance P&C environment and is owned by Ronan Davit within AQS.

Where it fits (process/stage/trigger)

Liquidity Stress Testing fits into liquidity resilience assessment and stress testing activities for Insurance P&C contexts. It can be used when the organization needs to evaluate liquidity under adverse scenarios and generate reports summarizing key stress test metrics.

Key capabilities / workflow

The agent automates scenario generation, simulates the insurer’s liquidity position under adverse market and operational conditions, validates stress test results, and produces reporting with key metrics. The workflow includes analyzing shocks, generating scenarios, simulating liquidity impacts, checking metric validity, and delivering an automated stress test report.

Inputs

Typical inputs are not specified. The provided examples of scenario conditions include catastrophe events, interest rate shocks, and delayed reinsurance recoveries, but no specific input files, datasets, systems, or data formats were provided.

Outputs / Deliverables

The outputs are automated stress test reports with key metrics. The provided examples of metrics include coverage ratio and cash shortfall.

Value

Liquidity Stress Testing provides value by helping assess liquidity resilience under different adverse shocks and by automating scenario generation and reporting. This supports faster, more consistent visibility into potential liquidity pressure points for an insurer.