Principle under which prudential requirements apply according to the nature, scale and complexity of risks, rather than identically to an international group and a local mutual.
A regime written for groups worth tens of billions, applied to the letter to a mutual with three hundred members, produces a compliance cost exceeding its margin and drives consolidation without adding anything to policyholder protection. The proportionality principle is the relief valve. It waives no requirement: it modulates intensity, the scale of the work, the frequency of reviews, the level of detail expected. Its historical weakness was its declaratory character, each undertaking having to demonstrate to the supervisor that it could scale down, a demonstration sometimes costlier than the requirement it avoided. The Solvency II review adopted in early 2025 answers that by creating an objective category of low-risk profile undertaking, defined by quantitative thresholds, which benefits from relief as of right after mere notification rather than after authorization. The principle remains a matter of interpretation: it is argued case by case, and poorly documented relief turns into a finding of deficiency during an on-site inspection.
A French mutual with 40M EUR of annual premium, monoline, with no cross-border activity and no product carrying financial guarantees, typically falls under the low-risk profile. Relief covers ORSA frequency, the content of the public report, and permitted combination of key functions, while the SCR calculation and MCR compliance remain untouched: proportionality bears on pillars two and three, and very little on pillar one.
proportionnalité, proportionality, entreprise à profil de risque faible, low-risk profile undertaking