Background to the Solvency II Project

Solvency I

The solvency margin is the amount of regulatory capital an insurance undertaking is obliged to hold against unforeseen events. Solvency margin requirements have been in place since the 1970s and it was acknowledged in the third generation Insurance Directives adopted in the 1990s that the EU solvency rules should be reviewed. The Directives required the Commission to conduct a review of the solvency requirements and following this review, a limited reform was agreed by the European Parliament and the Council in 2002. This reform is known as Solvency I.

Solvency II

It became clear during the Solvency I process that a more fundamental and wider ranging review of the overall financial position of an insurance undertaking was required, looking at the overall financial position of an insurance undertaking and taking into account current developments in insurance, risk management, finance techniques, international financial reporting and prudential standards, etc. This project became known as Solvency II.

• Basic architecture
• Lamfalussy process

During 2004 and 2005, the Commission issued three waves of Calls for Advice to CEIOPS, regarding different aspects of the new solvency system. The Commission set out some policy guidelines and principles to guide CEIOPS in its task in a document called the “Framework for Consultation”, which was published in July 2004. Following extensive internal discussions, interaction with many key stakeholders and subsequent public consultations, CEIOPS sent its final answers to the three waves for Calls for Advice on 30 June 2005, 1 November 2005 and 3 May 2006 respectively.

• Framework for consultation and Calls for Advice 
• Public Hearing on Solvency 2 – 21/06/2006

July 2007: Commission adopts the Solvency II Proposal

Following completion of the consultation process, the Commission adopted the Solvency II Proposal in July 2007:

• Press release
• Proposal COM (2007) 361
• Impact Assessment Report
• How to read the proposal for a Directive?

The Commission also wrote to CEIOPS regarding the subsequent phases of the project.

February 2008: Commission adopts an Amended Solvency II Proposal

In order to take account of the adoption of Directive 2007/44/EC of the European Parliament and of the Council of 5 September 2007 amending Council Directive 92/49/ EC and Directives 2002 83/EC, 2004/39/EC, 2005/68/EC and 2006/48/EC as regards procedural rules and evaluation criteria for the prudential assessment of acquisitions and increase of holdings in the financial sector as well as the adoption of the so-called Rome I Regulation on the law applicable on contractual obligations the Commission adopted an Amended Solvency II Proposal on 26 February 2008.

• Proposal COM(2008) 119 
• Correspondence table

Background Documentation

Work on Solvency II has been supported by series of Quantitative Impact Studies by CEIOPS. More information on the most recent QIS exercises.

Working documents from the earlier phases of the project are also available.