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This comprehensive report from 𝗘𝗜𝗢𝗣𝗔 provides a 𝗳𝗼𝗹𝗹𝗼𝘄-𝘂𝗽 𝘁𝗼 𝗮 𝗽𝗲𝗲𝗿 𝗿𝗲𝘃𝗶𝗲𝘄 𝗼𝗻 𝗼𝘂𝘁𝘀𝗼𝘂𝗿𝗰𝗶𝗻𝗴, assessing the progress made by 𝗡𝗮𝘁𝗶𝗼𝗻𝗮𝗹 𝗦𝘂𝗽𝗲𝗿𝘃𝗶𝘀𝗼𝗿𝘆 𝗔𝘂𝘁𝗵𝗼𝗿𝗶𝘁𝗶𝗲𝘀 (𝗡𝗦𝗔𝘀) in strengthening their oversight of 𝗼𝘂𝘁𝘀𝗼𝘂𝗿𝗰𝗶𝗻𝗴 𝘄𝗶𝘁𝗵𝗶𝗻 𝘁𝗵𝗲 𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 𝘀𝗲𝗰𝘁𝗼𝗿. It details the 𝗺𝗲𝘁𝗵𝗼𝗱𝗼𝗹𝗼𝗴𝘆 used, the 𝘀𝗰𝗼𝗽𝗲 of the review, and the 𝗲𝘃𝗮𝗹𝘂𝗮𝘁𝗶𝗼𝗻 𝗰𝗿𝗶𝘁𝗲𝗿𝗶𝗮 applied to recommended actions. The document highlights 𝘀𝗶𝗴𝗻𝗶𝗳𝗶𝗰𝗮𝗻𝘁 𝗮𝗱𝘃𝗮𝗻𝗰𝗲𝗺𝗲𝗻𝘁𝘀 by NSAs in areas such as 𝗼𝘂𝘁𝘀𝗼𝘂𝗿𝗰𝗶𝗻𝗴 𝗳𝗿𝗮𝗺𝗲𝘄𝗼𝗿𝗸𝘀, 𝗻𝗼𝘁𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻 𝗽𝗿𝗼𝗰𝗲𝘀𝘀𝗲𝘀, 𝗮𝗻𝗱 𝗱𝗼𝗰𝘂𝗺𝗲𝗻𝘁𝗮𝘁𝗶𝗼𝗻 𝗺𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁, with many recommended actions being 𝗳𝘂𝗹𝗳𝗶𝗹𝗹𝗲𝗱 𝗼𝗿 𝗽𝗮𝗿𝘁𝗶𝗮𝗹𝗹𝘆 𝗳𝘂𝗹𝗳𝗶𝗹𝗹𝗲𝗱. However, it also identifies 𝗿𝗲𝗺𝗮𝗶𝗻𝗶𝗻𝗴 𝗴𝗮𝗽𝘀, particularly in 𝗼𝗳𝗳-𝘀𝗶𝘁𝗲 𝘀𝘂𝗽𝗲𝗿𝘃𝗶𝘀𝗶𝗼𝗻 and the 𝗳𝘂𝗹𝗹 𝗼𝗽𝗲𝗿𝗮𝘁𝗶𝗼𝗻𝗮𝗹𝗶𝘇𝗮𝘁𝗶𝗼𝗻 𝗼𝗳 𝘀𝘂𝗽𝗲𝗿𝘃𝗶𝘀𝗼𝗿𝘆 𝘁𝗼𝗼𝗹𝘀, emphasizing the need for 𝗰𝗼𝗻𝘁𝗶𝗻𝘂𝗲𝗱 𝗲𝘃𝗼𝗹𝘂𝘁𝗶𝗼𝗻 𝗼𝗳 𝘀𝘂𝗽𝗲𝗿𝘃𝗶𝘀𝗼𝗿𝘆 𝗽𝗿𝗮𝗰𝘁𝗶𝗰𝗲𝘀 to ensure effective and continuous oversight of outsourcing arrangements.

𝗘𝗜𝗢𝗣𝗔 has issued new guidance on supervising 𝗺𝗮𝘀𝘀-𝗹𝗮𝗽𝘀𝗲 𝗿𝗲𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 and 𝗿𝗲𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 𝘁𝗲𝗿𝗺𝗶𝗻𝗮𝘁𝗶𝗼𝗻 clauses. This guidance, provided in two annexes to its 2021 Opinion on risk-mitigation techniques, aims to standardize supervisory approaches across Europe.
The first annex focuses on 𝗺𝗮𝘀𝘀-𝗹𝗮𝗽𝘀𝗲 𝗿𝗲𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲, offering detailed guidance for supervisors on its prudential treatment. It emphasizes ensuring a common European approach, particularly in light of recent high lapse risks in various markets. The guidance helps supervisors evaluate how elements like the measurement period, exclusions, or termination clauses affect risk transfer effectiveness and the 𝗦𝗼𝗹𝘃𝗲𝗻𝗰𝘆 𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝗥𝗲𝗾𝘂𝗶𝗿𝗲𝗺𝗲𝗻𝘁 (𝗦𝗖𝗥). A 12-month measurement period is generally expected, aligning with the SCR time horizon.
The second annex addresses 𝘁𝗲𝗿𝗺𝗶𝗻𝗮𝘁𝗶𝗼𝗻 𝗰𝗹𝗮𝘂𝘀𝗲𝘀 𝗶𝗻 𝗿𝗲𝗶𝗻𝘀𝘂𝗿𝗮𝗻𝗰𝗲 agreements that could undermine effective risk transfer. It highlights provisions that release the reinsurer from responsibility for legitimate losses during the treaty period and scrutinizes contracts where reinsurers can unconditionally retain transferred premiums and assets upon termination while being freed from obligations. These annexes promote supervisory convergence and fair competition within the market.

The 𝙀𝙪𝙧𝙤𝙥𝙚𝙖𝙣 𝘾𝙤𝙢𝙢𝙞𝙨𝙨𝙞𝙤𝙣 has published a 𝗱𝗿𝗮𝗳𝘁 Delegated Regulation amending Regulation (EU) 2015/35 under the 𝗦𝗼𝗹𝘃𝗲𝗻𝗰𝘆 𝗜𝗜 framework. This follows Directive (EU) 2025/2, effective from January 28, 2025, and applicable from January 30, 2027. The proposal seeks to align prudential insurance rules with updated legislation, improve proportionality for smaller insurers, and strengthen supervisory cooperation and macroprudential oversight. It addresses identified issues such as volatility, investment disincentives, and reporting burdens. The changes aim to enhance insurers’ capacity to support the EU economy through increased capital allocation to long-term and sustainable investments, including securitisation and venture capital.
𝗙𝗲𝗲𝗱𝗯𝗮𝗰𝗸 𝗽𝗲𝗿𝗶𝗼𝗱:
17 July 2025 - 05 September 2025

EIOPA submitted three draft technical standards and one revised guideline to the European Commission to support the implementation of the updated Solvency II Directive. The documents address criteria for identifying insurance groups under dominant or unified control, assessing cross-border activity relevance, updating lists of regional authorities for capital calculations, and revising guidance on undertaking-specific parameters. The Commission has three months to decide on adoption. These measures aim to clarify supervisory responsibilities, enhance cross-border oversight, and align technical rules with current legal frameworks, contributing to more effective and coordinated insurance supervision across the EU.

This consultation package is aimed at easing the reporting burden on insurance and reinsurance companies under the Solvency II framework. The proposed amendments seek to reduce reporting requirements by at least 26% for solo undertakings and 36% for small and non-complex undertakings. Key changes include reducing template frequency, deleting annual templates, and introducing technical simplifications. The EIOPA expects these changes to substantially reduce the burden on European insurers without compromising policyholder protection or financial stability. Stakeholders can provide feedback via the EU Survey until October 10, 2025.

This study examines how European insurance companies influence mutual fund stability, particularly during periods of significant net outflows. Utilizing Solvency II and Lipper/Eikon data, the study reveals that insurers exhibit contrarian trading behavior, purchasing fund shares when other investors divest, especially in fixed-income funds. This behavior is more pronounced for affiliated funds. The paper also finds that insurers' financial health, indicated by solvency ratios, impacts their ability to act as contrarian traders; lower solvency ratios correlate with fewer purchases during outflows. Funds with insurer investments demonstrate enhanced resilience, exhibiting lower flow-to-performance sensitivity and reduced flow volatility. The findings suggest insurers can mitigate investor runs, but their stabilizing influence may lessen under systemic stress affecting their own financial health.

The report underscores the robustness of Europe’s insurance, reinsurance, and pension sectors despite a volatile macroeconomic environment. Strong capital positions persist, with median Solvency II ratios slightly down but stable. Premium growth surged, with non-life up 8.2% and life at 13.8%. Profitability improved, with median return on assets at 0.7%. However, it points out that risks from exchange rate volatility, elevated interest rates, geopolitical tensions, and cyber threats require vigilant monitoring. It also notes significant US equity exposure, urging caution amid potential market corrections.

The insurance industry supports delaying the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) until 2028 while negotiations continue. Insurance Europe emphasizes the need for more time to assess impacts and avoid excessive regulatory burdens. Key recommendations include reducing CSRD reporting requirements, postponing CSDDD deadlines, simplifying EU Taxonomy rules, and removing Sustainability Risk Plans under Solvency II.

This paper examines the Solvency II correlation matrix used in Solvency Capital Requirement (SCR) calculations. It warns against misinterpreting null correlations as independence and highlights the matrix's limitations without a well-defined probabilistic model. It also critiques the flawed practice of arbitrarily increasing correlations to inflate capital requirements conservatively.

The insurance sector's role in sustainable finance, especially in the green transition, relies on balancing sustainability goals with prudential concerns like risk management under Solvency II. Emphasizing the importance of the Own Risk and Solvency Assessment (ORSA), the sector aims to align investments with policyholder interests while addressing sustainability risks. Efforts continue to integrate sustainability into regulatory frameworks, balancing risk management with support for the sustainability transition.