The supervisory framework for insurance undertakings in the European Union (EU), the basis of which was changed completely in 2016 as a result of the risk-oriented Solvency II regulatory and supervisory regime has been subjected to a fundamental reform in recent years in light of practical experiences with the existing framework. The outcome has been firstly being the amending of the Solvency II Directive, and secondly a new Directive creating a framework for the recovery and resolution of insurance companies (IRRD; Insurance Recovery and Resolution Directive). Both were published in the Official Journal of the European Union on 8 January 2025 and are required to be transposed into national law by EU Member States within two years.
The new Solvency II rules contain changes to the capital requirements, which are required to be in an even more risk-adequate form, while also placing insurance undertakings in a better position for making capital that is tied-up long term available to the economy. At the same time they will make the sector more resilient and prepared for future challenges in order to better protect insurance policyholders. In this way, insurance companies will contribute to deepening the capital markets unions, financing the green and digital transitions and boosting growth in the EU.
Resolution Directive
The IRRD is intended to make a preventive contribution to preparing insurance undertakings for crisis situations, which also creating a resolution framework that permits an orderly market exit if required. Under the Directive, insurance undertakings that meet certain criteria, are required to draw up a preventive recovery plan and to submit it to the supervisory authority: in Austria’s case the Austrian Financial Market Authority (FMA). The plan should contain actions that the insurance undertakings are required to take in the event of a significant deterioration of their financial situation. The competent authorities should intervene at an early stage, and in a coordinated manner on a cross-border basis.
The resolution framework is intended to protect insurance policyholders, beneficiaries (entitled and recipients), while also keeping the damage for the economy as a whole and for financial stability as low as possible – without recourse to taxpayer money.
Further information
Link to the text of the IRRD: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:L_202500001
Link to the text of the Amendments to Solvency II: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:L_202500002
For further information, see also: https://www.fma.gv.at/en/insurance/solvency-ii/
Journalists may address further enquiries to:
Boris Gröndahl (FMA Media Spokesperson)
Telephone: +43 (1) 249 59-6010
Mobile: +43 676 8824 9995
E-Mail: [email protected]