BETA


2021/0295(COD) Amendments to the Solvency II Directive

Progress: Awaiting signature of act

RoleCommitteeRapporteurShadows
Lead ECON FERBER Markus (icon: EPP EPP) HEINÄLUOMA Eero (icon: S&D S&D), YON-COURTIN Stéphanie (icon: Renew Renew), HAHN Henrike (icon: Verts/ALE Verts/ALE), VAN OVERTVELDT Johan (icon: ECR ECR), ZANNI Marco (icon: ID ID), MACMANUS Chris (icon: GUE/NGL GUE/NGL)
Committee Opinion ENVI
Committee Opinion JURI
Lead committee dossier:
Legal Basis:
TFEU 053-p1, TFEU 062, TFEU 114

Events

2024/11/27
   CSL - Draft final act
Documents
2024/11/05
   EP/CSL - Act adopted by Council after Parliament's 1st reading
2024/08/08
   EC - Commission response to text adopted in plenary
Documents
2024/04/23
   EP - Results of vote in Parliament
2024/04/23
   EP - Decision by Parliament, 1st reading
Details

The European Parliament adopted by 549 votes to 56, with 9 abstentions, a legislative resolution on the proposal for a directive of the European Parliament and of the Council amending Directive 2009/138/EC as regards proportionality, quality of supervision, reporting, long-term guarantee measures, macro-prudential tools, sustainability risks, group and cross-border supervision.

The European Parliament’s position adopted at first reading under the ordinary legislative procedure amends the proposal as follows:

Objectives

The amended text clarified the main objectives of the Directive which are to provide incentives for insurers to contribute to the long-term sustainable financing of the economy, to improve risk-sensitivity, to mitigate excessive short-term volatility in insurers’ solvency positions, to enhance the quality, consistency and coordination of insurance supervision across the Union and improve protection of policyholders and beneficiaries, and to better address the potential build-up of systemic risk in the insurance sector.

Granting of authorisations

Prior to the granting of authorisation to an insurance or reinsurance undertaking that is a subsidiary undertaking of an undertaking located in another Member State, or that will be under the control of the same legal or physical person as another insurance or reinsurance undertaking located in another Member State, the supervisory authority of the Member State which grants the authorisation should consult the supervisory authorities of any Member States concerned. The decision to grant the authorisation remains the competence of the supervisory authority of the home Member State in which the undertaking concerned seeks authorisation. However, the results of the joint assessment should be taken into consideration when making that decision.

Smaller and less complex undertakings

To facilitate the proportionate application of the Directive to undertakings which are smaller and less complex than the average undertaking, and to ensure that they are not subject to disproportionately burdensome requirements, it is necessary to provide risk-based criteria that allow for their identification.

It should be possible for undertakings complying with the risk-based criteria to be classified as small and non-complex undertakings in accordance with a simple notification process. Where, within a period of time not exceeding two months after such notification, the supervisory authority does not oppose the classification for duly justified reasons linked to the assessment of the relevant criteria, that undertaking should be deemed a small and non-complex undertaking.

Once classified as a small and non-complex undertaking, in principle, it should automatically benefit from identified proportionality measures on reporting, disclosure, governance, revision of written policies, calculation of technical provisions, own-risk and solvency assessment, and liquidity risk management plans.

Governance system

Members of the administrative, management and supervisory bodies of the insurance or reinsurance undertaking should at all times be of good repute and possess collectively sufficient knowledge, skills and experience to perform their duties. They should have been convicted of any serious offence or repeated offences relating to money laundering or terrorist financing or other offences that would bring into question their good repute, in, at least, the ten years preceding the year in which they are or would be performing their duties in the undertaking.

Insurance and reinsurance undertakings should put in place a policy promoting diversity in the administrative, management or supervisory body, including setting individual quantitative objectives related to gender-balance.

Risk management

Insurance and reinsurance undertakings should explicitly take into account the short-, medium- and long-term horizon when assessing sustainability risks. The supervisory authorities should ensure that undertakings, as part of their risk management, have strategies, policies, processes and systems for the identification, measurement, management and monitoring of sustainability risks over the short, medium and long term.

Member States should ensure that insurance and reinsurance undertakings develop and monitor the implementation of specific plans, quantifiable targets, and processes to monitor and address the financial risks arising in the short, medium, and long term from sustainability factors, including those arising from the process of adjustment and transition trends towards the relevant Member States and Union regulatory objectives and legal acts in relation to sustainability factors.

The targets, processes and actions to address the sustainability risks included in the plans, should be proportionate to the nature, scale, and complexity of the sustainability risks of the business model of the insurance and reinsurance activities.

Policy holder protection

The amended text aims to improve policyholder protection through enhanced cooperation between supervisory authorities, and to continue to prevent insurers from failing, thereby contributing to the stability of the financial sector.

Cooperation and information-sharing between the supervisory authority of the home Member State that granted authorisation to an insurance or reinsurance undertaking and the supervisory authorities of the Member States where that undertaking pursues activities by establishing branches or by providing services, should be strengthened in order to better prevent potential problems affecting consumer rights and to enhance the protection of policyholders across the Union. That enhanced cooperation is particularly important where there are significant cross-border activities, and should increase transparency and the regular mandatory exchange of information between supervisory authorities concerned.

Where the supervisory authority of a host Member State has serious concerns regarding the solvency position of an insurance or reinsurance undertaking which carries out significant cross-border activities in its territory, it should have the power to request the carrying out of a joint on-site inspection together with the supervisory authority of the home Member State, where there is a non-compliance with the Solvency Capital Requirement or the Minimum Capital Requirement.

The European Insurance and Occupational Pensions Authority (EIOPA)

The amended text entrusts EIOPA with a number of new tasks, in particular as regards the development of various aspects of technical standards, i.e. the secondary legislation that will provide a framework for more precise and harmonised implementation of the Directive in the Member States.

Documents
2024/01/29
   EP - Approval in committee of the text agreed at 1st reading interinstitutional negotiations
Documents
2024/01/24
   CSL - Coreper letter confirming interinstitutional agreement
2024/01/24
   EP - Text agreed during interinstitutional negotiations
Documents
2023/09/13
   EP - Committee decision to enter into interinstitutional negotiations confirmed by plenary (Rule 71)
2023/09/11
   EP - Committee decision to enter into interinstitutional negotiations announced in plenary (Rule 71)
2023/07/27
   EP - Committee report tabled for plenary, 1st reading
Details

The Committee on Economic and Monetary Affairs adopted the report by Markus FERBER (EPP, DE) on the proposal for a directive of the European Parliament and of the Council amending Directive 2009/138/EC as regards proportionality, quality of supervision, reporting, long-term guarantee measures, macro-prudential tools, sustainability risks, group and cross-border supervision.

The further integration of the single market for insurance is a key objective of this amending Directive. The integration of the EU single market for insurance increases competition and the availability of insurance products across Member States to the benefit of businesses and consumers. Insurance failures in the single market for insurance since the application of Solvency II emphasise the need for more consistency and convergence of supervision across the Union. The supervision of insurance and reinsurance undertakings operating under the freedom to provide services and the freedom of establishment should be further improved without undermining the objective of further integrating the single market for insurance to ensure consistent consumer protection and safeguarding fair competition across the single market.

The committee responsible recommended that the European Parliament's position adopted at first reading under the ordinary legislative procedure should amend the proposal as follows:

System of governance and risk management

The members of the administrative, management and supervisory bodies of the insurance or reinsurance undertaking should: (i) at all times be of good repute and possess collectively sufficient knowledge, skills and experience to perform their duties; (ii) not have been convicted for offences relating to money laundering or terrorist financing or other offences that would question their good repute.

Member States should require all insurance and reinsurance undertakings to have in place an effective system of governance which provides for sound and prudent management of the business. For environmental, social and governance risks, undertakings should explicitly take into account the short-term, medium-term and long-term horizon when assessing the possible materialisation of those risks.

Supervisory authorities should ensure that undertakings, as part of their risk management, have strategies, policies, processes and systems for the identification, measurement, management and monitoring of environmental, social and governance risks over an appropriate set of time horizons.

Insurance and reinsurance undertakings should develop specific plans, quantifiable targets and processes to monitor and address ESG risks in the short, medium and long term.

Reporting requirements

The amended text stipulated that small and medium-sized undertakings, small and non-complex institutions, captive reinsurance undertakings and low-risk profile undertakings may limit their sustainability reporting to the following information:

- a brief description of the undertaking’s business model and strategy;

- a description of the undertaking’s policies in relation to sustainability matters;

- the principal actual or potential adverse impacts of the undertaking on sustainability matters, and any actions taken to identify, monitor, prevent, mitigate or remediate such actual or potential adverse impacts;

- the principal risks to the undertaking related to sustainability matters and how the undertaking manages those risks.

Protection of policy holders

The amended text seeks to improve the protection of insurance policyholders through enhanced cooperation between supervisory authorities, and continues to prevent insurer failure, thus contributing to stability in the financial sector. Cooperation between the supervisory authority of the home Member State that granted authorisation to an insurance or reinsurance undertaking and the supervisory authorities of the Member States where that undertaking pursues activities by establishing branches or by providing services, should be strengthened in order to better prevent potential problems affecting consumer rights and to enhance the protection of policyholders across the Union. This cooperation should increase transparency and the regular exchange of information between concerned supervisory authorities and include more information coming from the supervisory authority of the home Member State, in particular regarding the outcome of the supervisory review process related to the cross-border activity , the financial condition of the undertaking, and market conditions which might impact the provision of services.

Role of the European Insurance and Occupational Pensions Authority

As regards the role of the European Insurance and Occupational Pensions Authority (EIOPA), new tasks should be assigned to EIOPA:

- preparing a report on the assessment of risks related to biodiversity loss by insurers, along with natural disasters and climate related risks, consistently with the European Green Deal;

- defining consistent guidelines for national rules followed by insurers when assessing their macroprudential risks , i.e. risks impacting an entire sector or the economy as a whole.

Moreover, EIOPA should set up and coordinate a collaboration platform to strengthen the exchange of information and to enhance collaboration between the relevant supervisory authorities of the home Member State and the host Member States where an insurance or reinsurance undertaking carries out, or intends to carry out, significant cross-border activities.

Documents
2023/07/18
   EP - Vote in committee, 1st reading
2023/07/18
   EP - Committee decision to open interinstitutional negotiations with report adopted in committee
2022/09/07
   EP - Amendments tabled in committee
Documents
2022/08/01
   EP - Amendments tabled in committee
Documents
2022/08/01
   EP - Amendments tabled in committee
Documents
2022/08/01
   EP - Amendments tabled in committee
Documents
2022/06/06
   EP - Committee draft report
Documents
2022/02/23
   ESC - Economic and Social Committee: opinion, report
Documents
2022/01/04
   ES_PARLIAMENT - Contribution
Documents
2021/11/22
   EP - Committee referral announced in Parliament, 1st reading
2021/10/25
   EP - FERBER Markus (EPP) appointed as rapporteur in ECON
2021/09/23
   EC - Document attached to the procedure
2021/09/23
   EC - Document attached to the procedure
Documents
2021/09/23
   EC - Document attached to the procedure
2021/09/23
   EC - Legislative proposal published
Details

PURPOSE: to amend the existing EU insurance rules (Solvency II Directive) to make them more resilient following the global COVID-19 pandemic.

PROPOSED ACT: Directive of the European Parliament and of the Council.

ROLE OF THE EUROPEAN PARLIAMENT: the European Parliament decides in accordance with the ordinary legislative procedure and on an equal footing with the Council.

BACKGROUND: Directive 2009/138/EC (Solvency II) sets out prudential rules for the insurance sector and aims to enable a single market for insurance services, while also protecting policyholders. The European Commission has a legal mandate to conduct a comprehensive review of pivotal components of the Solvency II Directive, in particular its risk-based capital requirements and rules on valuation of long-term liabilities, and to draw conclusions from the first five years of experience with the framework. This experience has also shown that the proportionality of Solvency II could be improved and has underlined the absence of specific EU-level provisions to address the build-up of systemic risks, to ensure preparedness for crises or to resolve insurers, where necessary.

Moreover, the framework needs to be consistent with the EU’s political priorities. In particular, the insurance sector should play a role in financing the post COVID-19 economic recovery, in completing the Capital Markets Union (CMU) and in achieving the targets of the European Green Deal.

CONTENT: the proposal aims to amend certain provisions of the Solvency II Directive , in particular those on capital requirements and on valuation of insurance liabilities towards policyholders and on cross-border supervision. It also introduces necessary clarifications and changes to provisions implementing the principle of proportionality. These changes are necessary and proportionate to improve the functioning of the regulatory framework for insurers and to attain the objectives of Solvency II.

More specifically, the proposed comprehensive review of Solvency II seeks to improve regulatory fitness and simplifies the framework as follows:

- excluding more small firms from Solvency II by increasing the size thresholds for the exclusions from the scope of Directive 2009/138/EC;

- making more proportionate rules available automatically to ‘low-risk profile undertakings’ and, after supervisory approval, to other insurers.

Strengthening the contribution of European insurers to help financing recovery

The planned changes aim to encourage insurers to make more long-term capital investments for the benefit of the economy. The Commission proposes releasing up to EUR 90 billion in the short term to help insurers increase their contribution as private investors to Europe's recovery from the crisis.

Climate and environmental risks

It is proposed that insurers should identify any material exposure to climate change risks and, where relevant, to assess the impact of long-term climate change scenarios on their business. Insurers classified as low-risk profile undertakings are exempted from scenario analyses.

Preserving policyholder protection

Consumers (policyholders) should be better protected when buying insurance products in other Member States. Moreover, consumers should be better informed about the financial situation of their insurer. Therefore, cooperation between the supervisory authority of the home Member State that granted authorisation to an insurance or reinsurance undertaking and the supervisory authorities of the Member States where that undertaking pursues activities by establishing branches or by providing services, should be strengthened in order to better prevent potential problems and to enhance the protection of policyholders across the EU.

This cooperation should include more information coming from the supervisory authority of the home Member State, in particular regarding the outcome of the supervisory review process related to the cross-border activity.

Supervision and financial stability

It is important that insurance and reinsurance undertakings maintain a healthy financial position, therefore the whole sector should be better scrutinised to avoid that its stability is put at risk.

Supervisory authorities should have the necessary powers to preserve the solvency position of specific insurance or reinsurance undertakings during exceptional situations such as adverse economic or market events affecting a large part or the totality of the insurance and reinsurance market, in order to protect policyholders and preserve financial stability. Those powers should include the possibility to restrict or suspend distributions to shareholders and other subordinated lenders of a given insurance or reinsurance undertaking before an actual breach of the Solvency Capital Requirement occurs.

Documents

  • Draft final act: 00005/2024/LEX
  • Commission response to text adopted in plenary: SP(2024)394
  • Results of vote in Parliament: Results of vote in Parliament
  • Decision by Parliament, 1st reading: T9-0295/2024
  • Approval in committee of the text agreed at 1st reading interinstitutional negotiations: PE758.180
  • Coreper letter confirming interinstitutional agreement: GEDA/A/(2024)000532
  • Text agreed during interinstitutional negotiations: PE758.180
  • Committee report tabled for plenary, 1st reading: A9-0256/2023
  • Amendments tabled in committee: PE736.375
  • Amendments tabled in committee: PE732.669
  • Amendments tabled in committee: PE735.620
  • Amendments tabled in committee: PE735.621
  • Committee draft report: PE732.668
  • Economic and Social Committee: opinion, report: CES5378/2021
  • Contribution: COM(2021)0581
  • Document attached to the procedure: EUR-Lex
  • Document attached to the procedure: SEC(2021)0620
  • Document attached to the procedure: SWD(2021)0260
  • Document attached to the procedure: EUR-Lex
  • Document attached to the procedure: SWD(2021)0261
  • Legislative proposal published: COM(2021)0581
  • Legislative proposal published: EUR-Lex
  • Document attached to the procedure: EUR-Lex SEC(2021)0620
  • Document attached to the procedure: SWD(2021)0260
  • Document attached to the procedure: EUR-Lex SWD(2021)0261
  • Economic and Social Committee: opinion, report: CES5378/2021
  • Committee draft report: PE732.668
  • Amendments tabled in committee: PE732.669
  • Amendments tabled in committee: PE735.620
  • Amendments tabled in committee: PE735.621
  • Amendments tabled in committee: PE736.375
  • Coreper letter confirming interinstitutional agreement: GEDA/A/(2024)000532
  • Text agreed during interinstitutional negotiations: PE758.180
  • Commission response to text adopted in plenary: SP(2024)394
  • Draft final act: 00005/2024/LEX
  • Contribution: COM(2021)0581

Votes

A9-0256/2023 – Markus Ferber – Provisional agreement – Am 2 #

2024/04/23 Outcome: +: 549, -: 56, 0: 9
DE IT FR ES PL RO NL CZ HU BG BE SE SK PT FI AT LT DK EL SI LU LV MT IE EE HR ?? CY
Total
89
59
72
54
44
24
27
21
17
15
21
20
13
20
14
17
10
14
13
8
6
7
4
12
6
5
1
1
icon: PPE PPE
151

Hungary PPE

1

Denmark PPE

For (1)

1

Luxembourg PPE

2

Malta PPE

For (1)

1
icon: S&D S&D
127

Czechia S&D

For (1)

1

Belgium S&D

2

Slovakia S&D

For (1)

1

Lithuania S&D

2

Greece S&D

1

Slovenia S&D

2

Luxembourg S&D

For (1)

1

Latvia S&D

2

Estonia S&D

2

S&D

For (1)

1

Cyprus S&D

1
icon: Renew Renew
95

Poland Renew

1

Hungary Renew

For (1)

1

Bulgaria Renew

2
3

Finland Renew

3

Austria Renew

For (1)

1

Lithuania Renew

1

Greece Renew

1

Slovenia Renew

2

Luxembourg Renew

2

Latvia Renew

For (1)

1

Ireland Renew

2

Estonia Renew

3
icon: Verts/ALE Verts/ALE
67

Italy Verts/ALE

For (1)

1

Spain Verts/ALE

3

Poland Verts/ALE

For (1)

1

Netherlands Verts/ALE

3

Czechia Verts/ALE

3

Belgium Verts/ALE

3

Sweden Verts/ALE

3

Portugal Verts/ALE

1

Finland Verts/ALE

Abstain (1)

3

Austria Verts/ALE

3

Lithuania Verts/ALE

2

Denmark Verts/ALE

2

Greece Verts/ALE

For (1)

1

Luxembourg Verts/ALE

For (1)

1

Ireland Verts/ALE

2
icon: ECR ECR
58

Germany ECR

1

France ECR

For (1)

1

Romania ECR

1

Bulgaria ECR

2

Sweden ECR

For (1)

Against (1)

2

Slovakia ECR

Abstain (1)

1

Lithuania ECR

1

Greece ECR

1
icon: NI NI
36

Germany NI

For (1)

3

France NI

Abstain (1)

3
1

Romania NI

For (1)

1

Netherlands NI

Against (1)

1

Czechia NI

For (1)

1

Belgium NI

For (1)

1

Greece NI

Against (1)

3

Latvia NI

Against (1)

1

Croatia NI

Abstain (1)

1
icon: ID ID
50

Czechia ID

Against (1)

1

Austria ID

3

Denmark ID

Against (1)

1

Estonia ID

Against (1)

1
icon: The Left The Left
30
4

Czechia The Left

Against (1)

1

Belgium The Left

Against (1)

1

Sweden The Left

Against (1)

1

Finland The Left

Against (1)

1

Denmark The Left

Against (1)

1

Greece The Left

2

Ireland The Left

4
AmendmentsDossier
600 2021/0295(COD)
2022/08/01 ECON 599 amendments...
source: 732.669
2022/09/07 ECON 1 amendments...
source: 736.375

History

(these mark the time of scraping, not the official date of the change)

docs/12
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2024-11-27T00:00:00
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