Revised Solvency II rules apply from January 2027

Solvency II (external site) is the EU rulebook for insurers and reinsurers. It sets how much capital an insurer holds against its risks, how it values its obligations to policyholders, how it is governed and what it reports (EUR-Lex (external site)).

Directive (EU) 2025/2 (external site) reviews these rules. It changes proportionality, quality of supervision, reporting, long-term guarantee measures (adjustments for insurers with long-term products), macroprudential tools, sustainability risks, and group and cross-border supervision (EUR-Lex (external site)).

Small and non-complex undertakings, a new category entered through a notification to the supervisor, automatically benefit from lighter rules. These cover reporting, disclosure, governance, the calculation of technical provisions, the Own Risk and Solvency Assessment (ORSA) and liquidity plans (Directive (EU) 2025/2 (external site)).

The risk margin is the part of technical provisions that another insurer would require, on top of the best estimate, to take over the obligations. From 30 January 2027 it uses a cost-of-capital rate of 4.75 percent, and the Commission estimates a fall of about 21 percent in the risk margin (EUR-Lex (external site)).

As an example, a risk margin of EUR 100 million under the old calibration would fall to about EUR 79 million with that estimate (EUR-Lex (external site)).

Every insurer assesses in its ORSA whether it has a material exposure to climate change risks. Where it does, it analyses at least two long-term scenarios: warming below two degrees Celsius and warming significantly above two degrees (Directive (EU) 2025/2 (external site)). Small and non-complex undertakings are exempt from the scenarios.

The directive applies to insurers and reinsurers under Solvency II; the lighter rules depend on classification as small and non-complex (Directive (EU) 2025/2 (external site)).

An Actuarial Analyst and a Life & Pensions Actuarial Analyst recalculate technical provisions, including the risk margin and contracts with options and guarantees (Directive (EU) 2025/2 (external site)).

A Capital Reporting Analyst and a Regulatory Reporting Analyst apply the new reporting rules, which are lighter for small and non-complex undertakings (Directive (EU) 2025/2 (external site)).

An ALM Analyst, who manages assets against liabilities, follows the changes to long-term guarantee measures (EUR-Lex (external site)). A Sustainable Finance Analyst supports the climate materiality assessment and scenarios in the ORSA (Directive (EU) 2025/2 (external site)).

Directive (EU) 2025/2 was adopted on 27 November 2024, published in the Official Journal on 8 January 2025 and entered into force on 28 January 2025 (EUR-Lex (external site)).

Member States adopt and publish national rules by 29 January 2027, and the revised framework applies from 30 January 2027. Both dates are set in the directive and confirmed (EUR-Lex (external site)).

Delegated Regulation (EU) 2026/269 amends the detailed Solvency II rules and also applies from 30 January 2027 (EUR-Lex (external site)). By 31 December 2027 the Commission reports on how the Financial Conglomerates Directive and Solvency II work together, including cross-sectoral participations (EUR-Lex (external site)).

Solvency II, Directive 2009/138/EC, set a risk-based regime in which capital depends on the risks an insurer runs (EUR-Lex (external site)).

The Commission proposed the review in 2021, together with a proposal for a recovery and resolution framework for insurers, which became Directive (EU) 2025/1 (EUR-Lex (external site)).