Skip to main content

Insurance rules’ review: encouraging solid and reliable insurers to invest in Europe’s recovery


Publication date
22 September 2021
Related department
Directorate-General for Financial Stability, Financial Services and Capital Markets Union


On 22 September 2021, the Commission adopted a comprehensive ‘review package’ of Solvency II rules. The overall aim is to ensure that insurers and reinsurers in the EU keep investing, and support the political priorities of the EU – in particular

The review also fills the gaps in the current rules and makes the insurance and reinsurance sector more resilient, so that it can weather future crises and protect policyholders. This is important because insurers have the potential to provide European businesses with long-term financing and offers vital protection to the EU economy, helping households and businesses manage their risks.

Insurance protection is a prerequisite for many activities regularly carried out by businesses, financial market participants and in individual households. The sector also offers solutions for retirement income and helps channel savings into financial markets and the real economy.

Solvency II has revolutionised the European insurance framework and its application since entering into application in 2016. European insurers and reinsurers are now much better equipped to withstand risks and continue financing investments. The review package does not represent a complete overhaul of the current rules, but rather makes targeted adjustments.

The next step is for the European Parliament and the Member States in the Council to negotiate the final legislative texts on the basis of the Commission’s proposals.


Review of the Solvency II Directive

The Solvency II Directive sets out mandates to review several of its pivotal components, in particular its risk-based capital requirements and rules on valuation of long-term liabilities, and to draw conclusions from the first years of experience with the framework. In February 2019, the Commission requested technical input from EIOPA for the review. The Commission also underlined the relevance of the EU’s political priorities in the context of the review.

Against this background, the Commission pursued the following objectives during its work on the review

  • provide incentives for insurers to contribute to the long-term sustainable financing of the economy
  • improve risk-sensitivity
  • mitigate excessive short-term volatility in insurers’ solvency positions
  • improve proportionality
  • enhance quality, consistency and coordination of insurance supervision across the EU, and improve the protection of policyholders and beneficiaries, including when their insurer fails
  • better address the potential build-up of systemic risk in the insurance sector
  • improve preparedness for extreme scenarios that may make recovery or the resolution of a failing insurer or reinsurer necessary


Recovery and resolution of (re)insurance undertakings

The proposed recovery and resolution of (re)insurance undertakings directive will allow authorities to

  • protect policyholders, beneficiaries and claimants
  • maintain financial stability
  • ensure the continuity of the (re)insurer’s critical functions
  • protect public funds by minimising reliance on extraordinary public financial support

It will provide authorities with

  • comprehensive and effective arrangements to prepare for and deal with (near)failures of (re)insurers at national level
  • cooperation arrangements to tackle cross-border (re)insurance failures

Normal insolvency proceedings will remain the alternative path for the whole or parts of a (re)insurer that cannot be resolved.

The directive will require (re)insurers to formulate pre-emptive recovery plans to facilitate prompt remedial action and ensure they are prepared should problems arise. It also grants national authorities powers to guarantee an orderly resolution of failing (re)insurers by ensuring as far as possible the continuity of the insurance coverage. This improves the outcome for consumers and limits recourse to taxpayers’ money.

The proposed EU (re)insurance resolution framework will ensure that (re)insurers' shareholders and creditors pay their share of the costs associated with a failure.



19 APRIL 2022
Summary of feedback received on the amendments to Solvency II and proposed framework for the recovery and resolution of insurers and reinsurers