Insurance Recovery and Resolution Directive
European directive giving insurance a resolution regime comparable to the banking one, with preventive plans, national resolution authorities, and powers to intervene before failure.
Directive (EU) 2025/1 of November 27, 2024, published in the Official Journal of the EU on January 8, 2025, gives European insurers and reinsurers the recovery and resolution regime they lacked. Until then, their failure was handled under general insolvency law, poorly suited to liabilities running over decades and to a portfolio whose transfer has to be organized so that policyholders stay covered. It fills the gap on the banking model of Directive 2014/59/EU, adapted. It requires significant undertakings to hold a preventive recovery plan setting out the measures they would take in the face of severe deterioration. Authorities, for their part, prepare a resolution plan in advance. The directive creates a resolution authority in each member state, separate or not from the supervisor but functionally distinct. And it equips that authority with tools: portfolio transfer to another insurer, creation of a bridge undertaking, asset separation, and write-down of claims. The stated aim is to preserve continuity of critical functions and protect policyholders without using public money as a backstop; the survival of the undertaking is not part of it. Its application is tied to that of the Solvency II review, adopted in the same package.
Directive (EU) 2025/1, published in the Official Journal of the European Union in January 2025 alongside the Solvency II review, with transposition expected in early 2027. The precedents the text had in mind are the failures of insurers selling under freedom of services from Denmark or Gibraltar into Ireland, France or the United Kingdom: Enterprise in 2016, Alpha and Qudos in 2018, then Gefion, barred from writing new business by the Danish supervisor in 2020. The supervisor that had granted authorization and the harmed policyholders were not in the same country, and EIOPA's cooperation platforms had no power of direct intervention.
- EIOPA, June 29, 2020 statement on the Gefion Insurance cross-border cooperation platform; Central Bank of Ireland, statement on Qudos Insurance A/S, December 2018; FERMA, "Solvency of European cross-border insurers back on the agenda"
- Directive (EU) 2025/1 of November 27, 2024, transposition deadline January 29, 2027 and application from January 30, 2027 (Clifford Chance briefing "The new EU Insurance Recovery and Resolution Directive", January 2025)
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