Solvency II

Solvency II is a pan-European risk-based capital regulatory framework applying to the European re/insurance industry.

It is a maximum harmonisation regime operating on a three-pillar approach of financial (solvency) requirements, governance and supervision, and reporting and disclosure.

Solvency II came into force at the beginning of 2016. Reviews of the regime were undertaken in 2018 and 2020.

Solvency II is designed to ensure policyholder protection and a stable financial system. It sets out the risk-based rules for re/insurance companies operating within the European Union, and has established a global benchmark for insurance regulation. The European Insurance and Occupational Pensions Agency (EIOPA) is responsible for several aspects of the Solvency II regime.

AMICE has been deeply engaged on the development of Solvency II from the outset, predominantly through the activities of its Prudential Regulation Working Group. AMICE continues to advocate for improvements to the current legislation to ensure that the mutual/cooperative model–one which has proven its robustness during challenging economic times–is properly recognised and reflected. AMICE seeks reform of the excessive and costly burden that mutual insurers often face, particularly the SME community.

AMICE advocates for proportionality in the application of rules, particularly for smaller mutual and cooperative concerns that find applying the Solvency II rules a disproportionate burden. AMICE argues that national regulators have a central role to apply proportionality when appropriate.

Following the publication of the European Commission’s Solvency II review and proposal on a recovery and resolution framework for insurance and reinsurance undertakings AMICE is assessing the proposals and their potential impact on mutual/cooperative insurers. AMICE believes that the Solvency II review provides an opportunity to fine tune certain elements of the current legislation to better reflect the mutual and cooperative insurance model. In particular, AMICE recognises the progress on areas such as proportionality which are important for mutual and cooperative insurers, and AMICE is the process of assessing the recommendations in that light.

AMICE reiterates that current legislative arrangements on insurance company solvency are robust and sufficient to protect European insurance policyholders.