2020 Solvency II Revision: Anything new during the summer?

In June 2022, the ECON committee of the European Parliament began discussions on the revision of Solvency II. The entire financial community anticipated a Parliament vote before the end of 2022 and a trialogue (negotiations between the European Parliament, the Council, and the European Commission) to be concluded in the first half of 2023. There were talks about its publication in the Official Journal of the European Union (OJEU) in July 2023.

Finally, after debates that lasted for over a year, the ECON commission has just voted on its text regarding the Solvency II revision this Tuesday, July 18th, 2023.

During an intervention with the GDV, the German Association of Insurers, Markus Ferber, a German Member of the European Parliament and rapporteur for the proposed amendments to the Solvency II Directive, mentioned this vote. Indeed, over a year after his initial proposal, he expressed confidence in the approval of the compromise he was about to submit for the deputies’ vote. In this compromise, Mr. Ferber announced that he had retained the three main axes of his initial proposal:

1. The release of capital for insurers
2. The right regulatory level with key technical elements that would move from level 2 to level 1 (yield curve, volatility adjustment, or LTEI)
3. Proportionality and raising the exemption thresholds

The IPE magazine, which attended his intervention with the GDV, had dedicated an article to the subject.

In the projects they published in 2021 and 2022, the European Commission and Council also pursued the objectives of capital release and improvement in the application of the proportionality principle. However, the choice to move level 2 measures to level 1, which would disrupt the regulatory architecture of Solvency II, was not made by the Commission and Council. This element could lead to intense negotiations during the trialogue.

It should be noted that for now, no publication of the compromise has been made, and therefore, we do not know the exact content of this compromise: what has been removed and/or amended compared to the version proposed for discussion in the meeting. As soon as it is published, the Addactis experts will present their analysis and comparison of the three positions.

However, now that Mr. Ferber’s compromise has been approved by the ECON Commission on July 18th, the trialogue is expected to begin in September [1]. Considering the transposition deadlines in different national laws, the insurance industry now expects the revision to come into effect in 2026.

[1] Subject to confirmation of this vote during the plenary session of the European Parliament scheduled for the week of September 11th.