Trilogues on the Solvency II Review and IRRD

– Last chance to address flaws and integrate the Single Market –

In September 2023, the inter-institutional negotiations between the European Parliament, the Commission and the Council began. The “trilogies” are the final stages of years-long processes between the calls for advice from the European Commission to the European Insurance and Occupational Pensions Authority (EIOPA) in February 2019. The great ambitions with which the review started have been more or less missed, so far. Instead of a clear path to further integrate the Single Market for insurance to the benefit of EU consumers and businesses has been missed. A more comprehensive Solvency II Regime accompanied by an EU-wide harmonised Insurance Recovery & Resolution Directive (IRRD) and Insurance Guarantee Schemes (IGS) seem miles away. Instead, the fortification of national interests to the detriment of business conducted across the Single Market and further addition to the ever-increasing regulatory burden will put the EU insurance industry further on the backfoot if Co-legislators (European Parliament, Commission and Council) do not significantly adjust their positions during the trilogues.

The start of the trilogues comes only days after European Commission President Ursula von der Leyen emphasised the objective to reduce the regulatory burden to the EU economy by 25% and strengthen the open strategic autonomy of the European Union. These objectives seem to not have include the insurance industry. Co-legislators voiced the ambition to come to agreement by the end of the year, under the current Spanish Council Presidency. While Insurance Ireland strongly supports the objective, it also calls on pragmatic solution to not sacrifice the competition in the EU and the competitiveness of EU insurers globally to national interests.

The room to manoeuvre is traditionally small during trilogues and time is pressing. Against this background, Insurance Ireland has determined key aspects on each of the files under discussion.

On the Solvency II Review, Insurance Ireland believes that the following aspects are key to a successful outcome of the discussion:

1. Include competition across the Single Market and the competitiveness of the EU in-surance market globally in the objectives of Solvency II;
2. Ensure a targeted definition of “significant cross-border activities”, not a catch-all, ex-clude reinsurers, and establish digital supervisory platforms;
3. Reduce capital requirements in a meaningful way by reducing the risk margin by, at least, 50%;
4. Confirm the LRPU concept and acknowledge the captive business model;
5. Ensure a net-reduction of the regulatory burden at the end of the process and across all regulatory levels.

For the trilogue on the IRRD, the following aspects will be the keys to success:

1. Define a scope which is fit-for-purpose;
2. Safeguard the supervisory intervention ladder;
3. Ensure effective and efficient funding arrangements;
4. Ensure efficient collaboration between competent authorities;

In addition, CO-Legislators should agree to develop a harmonised framework for IGS as soon as possible.

Further information on these aspects can be found in our most recent position papers.

Insurance Ireland is committed to further improve the regulatory framework in the EU and stands ready to support any efforts by stakeholders.