The Directive amending Solvency II and the Insurance Recovery and Resolution Directive have just been published in the Official Journal of the European Union.
Member States must implement the amendments to the Solvency II Directive into national law by the end of January 2027. One of the highlights for insurers with long-term liabilities will be the changes to the calculation of the risk margin, including a reduction in the cost-of-capital rate to 4.75%. See my previous post for a more detailed summary of the key changes arising from the amendments.
Similarly, on the IRRD, EU Member States must implement the Directive into national law by the end of January 2027. Member States will have to set up national insurance resolution authorities, either within existing competent authorities (as independent departments separate from the supervisory functions) or as standalone legal entities. The resolution authority will have a range of tools to deploy when faced with (re)insurers that are failing or likely to fail (such as solvent run-off, write down and conversion and/or transfer tools). The resolution authority will have to draw up resolution plans for life and non-life insurers and reinsurers representing at least 40% of the relevant national markets.
Under the IRRD, the requirement to draw up and submit pre-emptive recovery plans to national supervisory authorities only applies to those (re)insurers who represent at least 60% of the national life and non-life insurance and reinsurance markets. How this will be reconciled with the existing Irish regulations for pre-emptive recovery planning for (re)insurers remains to be seen.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
