What the EU is doing and why
Insurance policies play an important role in the lives of the majority of European citizens. For many of the things people do every day, holding an insurance policy is essential to protect against potential risks. An insurance policy can also serve as a savings product, which will allow policyholders to provide for their long-term welfare while insurers are able to channel these savings via financial markets into the real economy.
On one hand, there should be harmonised rules on the taking up and pursuit of insurance business to allow policyholders to enjoy the benefits of an effective Single Market for insurance. On the other hand, the legal framework should prioritise the protection of policyholders and beneficiaries. In particular, the prudential rules should ensure that capital requirements are harmonised throughout the EU in order to achieve a uniform level of protection for policyholders.
The disorderly failure of an insurer can therefore have a significant impact on policyholders, beneficiaries, injured parties or affected businesses. This is especially the case where a substitute for vital insurance services cannot be found in a reasonable amount of time and at a reasonable cost.
Resolution is the last resort, and should only occur when national authorities determine that a failing (re)insurer cannot go through normal insolvency proceedings without harming consumers or businesses or causing financial instability more broadly.
Solvency II
Solvency II is a harmonised prudential framework for insurance firms, applicable since 2016? It replaces a patchwork of rules in the areas of
- life insurance
- non-life insurance
- reinsurance
Solvency II rules introduce prudential requirements tailored to the specific risks which each insurer bears. They promote transparency, comparability and competitiveness in the insurance sector.
The framework consists of
- a directive
- delegated acts
- technical standards
Solvency II Directive
The Solvency II Directive became fully applicable to European insurers and reinsurers on 1 January 2016. It covers three main areas, related to capital requirements, risk management and supervisory rules
- Pillar 1: Risk-based capital requirements
The directive requires insurance companies to hold capital in relation to their risk profiles to guarantee that they have enough financial resources to withstand financial difficulties.
- Pillar 2: Governance and risk management requirements
Insurance companies have to- put in place an adequate and transparent governance system
- conduct their own risk and solvency assessment on a regular basis
- Pillar 3: Supervisory reporting and public disclosure
The directive- enables supervisors to review and evaluate whether insurance companies comply with the rules
- requires these companies to report to supervisory authorities and disclose information publicly
On 22 September 2021 the Commission adopted a proposal for amendments to the Solvency II Directive. On 13 December 2023 the European Parliament and the Council reached a political agreement on this proposal.
Solvency II Delegated Regulation
Under the Solvency II Directive the European Commission can adopt delegated and implementing acts , including technical standards and implementing acts setting out the information for the calculation of technical provisions and basic own funds.
Equivalence decisions
Equivalence decisions recognise that the supervisory regime for insurers in force in certain non-EU countries is equivalent to the Solvency II regime.
After receiving equivalence, EU insurers can use local rules to report on their operations in these countries, while third country insurers are able to operate in the EU without complying with all EU rules.
To know more about the international activities of the Commission in the area of insurance, see the EU and the world section.
Methodology to determine the relevant risk-free interest rate term structure
Article 77e of the Solvency II Directive requires EIOPA to lay down information relating to the relevant risk-free interest rate term structure to calculate the best estimate.
Insurance recovery and resolution
The EU provides a framework for authorities to manage insurance failures effectively.
Insurance policies play an important role in the lives of the majority of European citizens. For many of the things people do every day, holding an insurance policy is essential to protect against potential risks. An insurance policy can also be a savings product, which will allow policyholders to provide for their long-term welfare while insurers are able to channel these savings via financial markets into the real economy.
The disorderly failure of an insurer can therefore have a significant impact on policyholders, beneficiaries, injured parties or affected businesses. This is especially the case where a substitute for vital insurance services cannot be found in a reasonable amount of time and at a reasonable cost.
Resolution should occur when national authorities determine that by resolving a failing (re)insurer they can better achieve resolution objectives, such as protecting policy holders and preserving financial stability, than if the (re)insurer entered normal insolvency proceedings.
On 22 September 2021 the Commission adopted a proposal for an Insurance Recovery and Resolution Directive (IRRD). On 14 December 2023 the European Parliament and the Council reached a political agreement on this proposal.
Insurance guarantee schemes
Insurance guarantee schemes (IGSs) use contributions raised by the insurance industry to provide last-resort protection for policyholders, beneficiaries and injured parties when their insurers cannot meet their contractual commitments in case of failure. While, creating consistent last-resort safety nets could promote trust in the single market for insurance, introducing a minimum common framework for these schemes in Europe might also entail implementation costs. However, as such action would constitute a major improvement in protection for policyholders across the EU, the Commission is committed to reassess the appropriateness and timing of alignment in the future.
Reorganisation and winding-up
The rules on reorganising and winding up insurance companies are set out in title IV of the Solvency II Directive.
If an insurance company becomes insolvent, the decision to reorganise or wind up the company is made by the relevant authorities in the EU country where the insurance company is registered. Winding-up proceedings apply to all EU branches of the insurance company.
The supervisory authorities must tell their counterparts in all other EU countries about the decision, including any practical implications. Creditors must all be informed and treated in the same way, regardless of the EU country they are based in.
Reorganisation measures and winding-up decisions can be published in the Official Journal of the European Union by filling out and submitting one of the forms below. You can find here the published reorganisation measures and winding-up decisions per year.
The forms can be downloaded and completed in any official language of the EU.
Please return the completed forms to fisma-d4
ec [dot] europa [dot] eu (fisma-d4[at]ec[dot]europa[dot]eu).
Policy making timeline
- 29 October 2025Delegated act - Solvency II
- 14 October 2025Request to EIOPA - IRRD
- 8 January 2025Legislation - IRRD
Publication of the Insurance Recovery and Resolution Directive in the Official Journal.
- 13-14 December 2023Political agreement – Solvency II review & insurance recovery and resolution
- 22 September 2021Legislative proposal - Solvency II review & insurance recovery and resolution
Comprehensive ‘review package’ of Solvency II rules, with the aim is to ensure that insurers and reinsurers in the EU keep investing, and support the political priorities of the EU.
- 22 September 2021Report - Insurance Guarantee Schemes
- 2 August 2021Delegated act - Solvency II
Adoption of amendments to the Solvency II Delegated Regulation to require insurers to take into account sustainability risks in their system of governance, risk management system and investment activities. The amendments will ensure a contribution from the insurance sector to the European Green Deal’s objective to direct more financial and capital flows to green investment and to avoid stranded assets.
- 1 July 2020Consultation - Solvency II
- 8 March 2019Delegated act - Solvency II
Adoption of amendments to the Solvency II Delegated Regulation under the form of a delegated regulation to help insurers invest in equity and private debt by reducing their capital requirements for investments. The amendments are set to boost private sector investment, a key objective of the capital markets union action plan.
- 11 February 2019Request to EIOPA - Solvency II
- 7 February 2019Request to EIOPA - Solvency II
- 1 June 2018Delegated act - Solvency II
Adoption of an amendment to the Solvency II delegated regulation to make it easier for insurers to invest in simple, transparent and standardised (STS) securitisation. The changes aligned the Solvency II framework with the harmonised rules on STS securitisation adopted by the EU and ensure consistent prudential treatment of this asset class in the banking and insurance sectors.
- 18 June 2017Delegated act - Solvency II
Adoption of amendments to the Solvency II Delegated Regulation to remove further impediments to infrastructure investments. In addition to "infrastructure projects", a new category of “infrastructure corporates” can benefit from lower capital requirements.
- 18 January 2016Delegated act - Solvency II
Adoption of amendments to the Solvency II Delegated Regulation to remove impediments to investments by insurers in infrastructure. The changes introduce the new category of “infrastructure projects”, which can benefit from lower capital requirements than other investments of the same asset class.
- 1 January 2016Legislation - Solvency II
The Solvency II Directive becomes fully applicable to European insurers and reinsurers.
- 2009Legislation - Solvency II
Adoption of the Solvency II Directive covering three main areas, related to capital requirements, risk management and supervisory rules.
- 17 July 2025Public feedback - Solvency II Delegated Regulation
Insurance Recovery and Resolution Directive (IRRD) - 2025/1/EU
Basic information
Legislative history
- Original legislative proposal for the IRRD
- Impact assessment accompanying the legislative proposal for the IRRD
- Executive summary of the impact assessment accompanying the legislative proposal for the IRRD
- History of the legislative initiative on insurance & reinsurance firms – review of prudential rules
Risk management and supervision of insurance companies Directive (Solvency II) - 2009/138/EC
Basic information
- Text of the Solvency II Directive (2009/138/EC)
- Summary of the legislation: Insurance and reinsurance
Delegated and implementing acts
Transposition by EU countries
- The Solvency II Directive was transposed by all EU Member states into their national law.
- Report from the Commission on the application of title III of Directive 2009/138/EC as regards the supervision of insurance and reinsurance undertakings in a group, and the assessment of the transitional period for the occupational retirement provision business of life insurance undertakings
Ongoing revision
- Ongoing revision of the Solvency II Directive
- Legislative initiative on the review of prudential rules for insurance & reinsurance firms