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.

The Commission explains 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.