Solvency II Review - Commission’s proposals

The Solvency II Directive introduced a new solvency regime that has been applicable since 1 January 2016 to about 5,000 (re)insurance undertakings in the European Economic Area (EEA).  It provides that some areas must be reviewed by the Commission in 2020 (e.g. methods, assumptions and standard parameters used when calculating the Solvency Capital Requirement standard formula). Other parts of the Solvency II framework have been identified as deserving a reassessment, such as the supervision of cross-border activities of insurers and the possible need of minimum harmonised rules on Insurance Guarantee Schemes (IGS).


On 22 September 2021, the European Commission adopted its review of the Solvency II Regime in the context of the EU’s post pandemic recovery.  The review consists of:

  • a legislative proposal to amend the Solvency II Directive,
  • a communication on the review of the Solvency II Directive (the amendments to the Solvency II Directive will be supplemented by Delegated Acts at a later stage. The Communication sets out the Commission's intentions in this regard) and
  • a legislative proposal for a new Insurance Recovery and Resolution Directive (IRRD), which seeks to harmonise national laws on recovery and resolution of insurance and reinsurance undertakings.


The review does not contain proposals on the introduction of harmonised rules for IGS. The Commission states, however, that it is committed to reassessing the appropriateness and timing of any such alignment in the future. It has therefore published, at the same time of the review, a quantitative assessment of several policy options for a possible proposal on the introduction of harmonized rules for IGSs.

The Commission explained that the proposals aim to strengthen European (re)insurers' contribution to the financing of the COVID-19 recovery, to progress the CMU and to channel funds towards the European Green Deal.  It estimates that its proposed reform of capital requirements could lead to the release of up to €90 billion of (re)insurers’ capital in the short term at EU level.

State of play and next steps

The proposals are being discussed by the European Parliament and the Council of the EU.

Solvency II Directive

The Council developed and agreed its general approach under the French EU presidency in the first half of 2022. The Council inter alia proposed changes to capital requirements and changes aimed at reducing the administrative burden on insurers. The Council further outlined that EIOPA should be given a wider portfolio of tasks, which includes: (i) the preparation of a report on the assessment of risk related to biodiversity loss by insurers, along with natural disasters and climate related risks, consistently with the Green Deal; and (ii) defining consistent guidelines for national rules followed by insurers when assessing their macroprudential risks.

At the EP, under the rapporteurship of MEP Markus Ferber (EPP, Germany), the discussions are taking more time than planned because of diverging positions of the political groups. How to address concerns about capital and volatility and the appropriate way to integrate sustainability requirements for insurers have been the main issues.

The EP is expected to agree on its position before the summer, allowing the trilogue to start in the second half of the year under the Spanish EU presidency.

Insurance Recovery and Resolution Directive (IRRD)

Trilogues between the Council, the EP and the Commission are expected to begin in the second half of 2023.

In its position, the Council welcomes the value of introducing a harmonised minimum European framework for the recovery and resolution of insurance undertakings, provided that this framework is proportionate, adapted to the insurance sector and contributes adequately to the protection of policyholders and the maintenance of financial stability in the European Union’s Single Market. The Council’s position includes a number of changes to the Commission’s proposal, such as recognition of mutuals and conglomerates, a reduced scope of some of the planning requirements, the flexibility of the planning requirements and the powers to restructure insurance claims. The EP is still working on its position on the proposal.