EC Amends Regulation Supplementing Solvency II Directive
EC published the Delegated Regulation (EU) 2019/981 that amends the Regulation (EU) 2015/35, which supplements Solvency II Directive (2009/138/EC) on the taking-up and pursuit of the business of insurance and reinsurance. These new rules under Solvency II will make it easier for insurers to provide financing to companies, including small and medium enterprises (SMEs). Regulation (EU) 2019/981 shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. Points (50), (59) to (61), (66) and (74) of Article 1 of Regulation (EU) 2019/981 shall apply from January 01, 2020.
The current level of capital requirements makes it costly for insurers to finance SMEs, particularly in the case of long-term equity investments and private debt. Insurers providing finance via such instruments, which should help mobilize private-sector investment, is a key objective of the Capital Markets Union. Regulation (EU) 2019/981 introduces simplifications for the calculation of capital requirements by insurance companies as well as alignments between rules for banking and the insurance sector. This will reduce the regulatory burden for insurers without jeopardizing the safety of the sector. Further revisions of technical nature in the delegated regulation ensure that the rules remain fit for purpose. A more fundamental review of Solvency II is due by the end of 2020. Preparatory work for that review is ongoing. In line with the objectives of the Capital Markets Union, further analysis on remaining obstacles to investments in the real economy will be undertaken.
Related Links
Effective Date: July 08, 2019
Keywords: Europe, EU, Insurance, Securities, Solvency II, Capital Requirements, Capital Markets Union, Regulation 2019/981, Regulation 2015/35, SCR, EC
Featured Experts

Trevor Howes
IFRS 17 technical advisor; AXIS actuarial modeling system expert; extensive experience in life insurance and life reinsurance, with focus on modeling, valuation, and financial reporting

Nick Jessop
Scenario modeling expert; risk management specialist; quantitative financial modeler

Adam Koursaris
Asset and liability management expert; capable modeler; risk and capital specialist
Related Articles
EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models
The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.
EP Reaches Agreement on Corporate Sustainability Reporting Directive
The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).
PRA Consults on Model Risk Management Principles for Banks
The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.
EC Regulation Amends Standards for Calculating Credit Risk Adjustments
The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
HKMA Announces Launch of Data Repository on Sustainable Finance
The Hong Kong Monetary Authority (HKMA) announced that the Green and Sustainable Finance (GSF) Cross-Agency Steering Group has launched the information and data repositories and outlined the progress made in advancing the development of green and sustainable finance in Hong Kong.
BIS Hub Updates Work Program for 2022, Announces New Projects
The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.
EIOPA Issues Cyber Underwriting Proposal, Statement on Open Insurance
The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.
NGFS Report on Integration of G-Cubed Model into NGFS Scenarios
The Network for Greening the Financial System (NGFS) published a report that explores the feasibility of integrating the G-Cubed general equilibrium model into the NGFS suite of models.
US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule
Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)
EIOPA Consults on Review of Securitization Framework in Solvency II
The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.