The European Commission launched a consultation on draft technical measures under the Solvency II framework, including updates to insurance regulations covering areas such as group solvency calculations and the definition of natural and man-made catastrophes.
These changes follow a 2025 European Union directive intended to encourage insurers to support the long-term financial stability of the bloc’s economy, improve risk sensitivity, and reduce excessive short-term volatility in insurers’ solvency.
The directive also calls for regulations to reflect the impact of major adverse events, such as the pandemic, and account for the United Kingdom’s departure from the EU.
According to trade group Insurance Europe, the updates create an opportunity to remove excessive conservatism and volatility from the prudential framework, which could release bn in capital and support EU goals on competitiveness, sustainability, and resilience.
Insurance Europe added that the review should also simplify administrative processes and reporting requirements, alongside capital reforms.
The Solvency II review is a test of the EU’s growth and competitiveness ambitions. European insurers want to contribute to achieving them, but compared to countries such as the U.S. and Japan, they are required to hold significantly higher capital buffers.
Angus Scorgie, head of prudential regulation and international affairs at Insurance Europe
Scorgie noted that the Solvency II updates could help unlock bn in capital while maintaining high levels of policyholder protection.
The commission will accept feedback on the draft Solvency II measures until Sept. 5.
Alongside the Solvency II updates, European regulators are also proposing new rules to incorporate sustainability risks into companies’ existing risk management practices and to ensure these risks are disclosed in a consistent and efficient manner.
