Revision of the directive adopted in late 2024 and published in early 2025, adjusting rate extrapolation, the risk margin and proportionality, and adding liquidity risk and sustainability requirements.
After eight years of application, the Solvency II review corrects what experience exposed, without redesigning the architecture. Four blocks stand out. Long-term liability measurement is adjusted: the method for extrapolating the rate curve beyond the last liquid point is changed to narrow the gap between the regulatory rate and the market rate, and the risk margin calculation is lightened by a mitigation factor recognizing that future risks diversify over time. Proportionality becomes objective, with a low-risk profile category opening relief as of right. Scope widens to risks the original text barely addressed: a liquidity risk management plan, sustainability risks brought into ORSA with climate transition plans, and macroprudential tools given to supervisors. Transposition by member states is expected in early 2027, and the package is inseparable from the recovery and resolution directive adopted alongside it.
Directive (EU) 2025/2 published in the Official Journal of the European Union in January 2025, with transposition expected in early 2027. The risk margin relief and the extrapolation revision mainly benefit long-tail life insurers, whose coverage ratio gains several points without a single euro of own funds being raised, which shows how far a prudential ratio depends on the measurement convention as much as on substance.
directive (UE) 2025/2, Solvency II review, révision de Solvabilité II, paquet solvabilité 2025