Directive (EU) 2025/2 explained: what changes in Solvency II from 30 January 2027

Directive (EU) 2025/2 is the legal text behind the Solvency II review. It amends Directive 2009/138/EC in seven areas and applies from 30 January 2027. This article goes through each area, gives the article numbers that change, and says what a reporting or actuarial team has to do differently. It ends with a timeline that separates what is already adopted from what is still pending in September 2026, and a note on how our reporting and calculation tools pick the changes up.

The text runs to 91 pages in the Official Journal and most of it concerns supervisors. The parts that reach a reporting team are fewer: new deadlines, a restructured SFCR with an audited balance sheet, a proportionality regime for small and non-complex undertakings, a new extrapolation method for the risk-free curve, a revised risk margin and a liquidity risk management plan.

What Directive (EU) 2025/2 is

The directive was adopted on 27 November 2024 and published in the Official Journal on 8 January 2025. It is an amending directive: every provision inserts, replaces or deletes text in Directive 2009/138/EC, and the consolidated Solvency II Directive is what firms will read from 2027 onwards.

You can read the amending text in our regulation library: Directive (EU) 2025/2. The original Directive 2009/138/EC and the other EU acts sit under main EU regulations.

A companion act, Directive (EU) 2025/1, sets up the insurance recovery and resolution framework (IRRD). It was published the same day and carries the same dates. It is a separate regime and is not covered here beyond the timeline.

The main changes at a glance

Proportionality: small and non-complex undertakings

Article 29a lists the criteria and Article 29b sets the process. An undertaking is classified as small and non-complex if it meets all applicable criteria for the two consecutive financial years before classification. For a life undertaking the list includes an interest rate risk submodule of at most 5 percent of gross technical provisions, life technical provisions of at most EUR 1 billion, cross-border gross written premium below EUR 20 million or 10 percent of the total, accepted reinsurance of at most 50 percent of gross written premium, and compliance with the SCR. For a non-life undertaking the premium ceiling is EUR 100 million a year, with a cap of 30 percent on marine, aviation, transport, credit and suretyship classes and a combined ratio condition. Composite undertakings meet the life and non-life lists depending on how their business is weighted.

The supervisor can oppose a classification within a set period, extended to four months for requests received in the first six months after 30 January 2027. Article 29c lists the proportionality measures a classified firm may use, Article 29d lets other firms apply for individual measures, and Article 29e asks classified firms to report on the measures they use within a year. EIOPA published a technical specification for calculating the criteria on 7 April 2026 (EIOPA-BoS-26-102); it covers the two-year look-back and the materiality thresholds that decide which list a composite has to meet.

Reporting and disclosure

Three things change for the reporting calendar. The regular supervisory report becomes a periodic document: every three years for most undertakings, and for small and non-complex undertakings every three years or, where the supervisor permits, up to every five (Article 35(5a)). The annual deadlines move: 16 weeks for solo annual information and 18 weeks for the RSR (Article 35b), 22 weeks for group annual information (Article 254(3)). The quarterly deadlines stay at five weeks for solo and 11 weeks for group. In practice the annual QRT deadline gains two weeks and the narrative reports gain four.

The SFCR is rebuilt. Article 51 now requires two parts, disclosed together: a short part for policyholders and beneficiaries (business and performance, capital management and risk profile, including sustainability risks) and a full part for market professionals. Article 51a adds the audit. The Solvency II balance sheet in the SFCR, or in a single group SFCR under Article 256, must be audited, unless the undertaking is small and non-complex or a captive. Member States may extend the audit to those firms and to other parts of the report.

The template set itself sits at level 3 and is covered below under pending items. Our article on the Solvency II QRT list tracks which templates stay, go and arrive with taxonomy 2.10.0.

Long-term guarantee measures

Article 77a is replaced. The risk-free curve is now extrapolated beyond a first smoothing point, defined as the longest maturity where the market is deep, liquid and transparent and where the share of outstanding bonds at that maturity or longer is sufficiently high. Article 77a(2) contains a phasing-in mechanism, and Article 77e requires EIOPA to publish a curve without the phasing-in for disclosure purposes.

Article 77d makes the volatility adjustment subject to prior supervisory approval and adds conditions on how it is applied per currency. The risk margin changes in two places. Article 77 of the directive now states that the cost-of-capital rate is 4.75 percent as of 30 January 2027 and that the projected capital requirement carries an exponential, time-dependent element. Delegated Regulation (EU) 2015/35, as amended by Delegated Regulation (EU) 2026/269, calibrates that element so that the projected risks reduce by at least 3.5 percent a year, and it keeps the symmetric adjustment for equity risk within plus or minus 13 percent. The standard formula mechanics behind those numbers are described in our article on the SCR standard formula calculation.

Macroprudential tools and liquidity

The directive adds a liquidity layer to Solvency II. Article 144a requires every undertaking to keep a liquidity risk management plan with short-term cash flow projections for assets and liabilities, extendable to the medium and long term on request. Article 144b gives supervisors powers to remedy liquidity vulnerabilities as part of the supervisory review, and Article 144c allows a temporary suspension of redemption rights in exceptional circumstances, with a ban on dividends, buy-backs and variable remuneration while the suspension lasts. Article 44(2) links the plan to the volatility adjustment: a firm applying the VA must assess whether liquidity constraints could conflict with it.

The ORSA gains two items under Article 45(1): consideration of the macroeconomic situation and, on a reasoned request from the supervisor, the macroprudential information the supervisor provides.

Group supervision and sustainability risk

Article 212 widens the group definition to catch undertakings managed jointly, and Article 213 restates when group supervision applies. Article 213a creates small and non-complex groups with criteria that mirror Article 29a at consolidated level, and Article 214(2) specifies what a negligible interest is for exclusion decisions.

On sustainability, Article 44(2) requires strategies, policies, processes and systems for sustainability risks over the short, medium and long term, and Article 45a requires a climate change scenario analysis where the exposure is material, with at least two long-term scenarios: one with global warming kept below two degrees Celsius and one significantly above. Small and non-complex undertakings are exempt from specifying the scenarios.

Timeline

What is adopted and what is still pending (September 2026)

Adopted and in force: the directive itself and Delegated Regulation (EU) 2026/269, which amends Delegated Regulation (EU) 2015/35 on technical provisions, long-term guarantee measures, own funds, equity risk, spread risk on securitisations, other standard formula capital requirements, reporting and disclosure, proportionality and group solvency.

Submitted, awaiting Commission endorsement: the amendments to Implementing Regulation (EU) 2023/894 on supervisory reporting and Implementing Regulation (EU) 2023/895 on public disclosure. EIOPA’s final report of 30 March 2026 states that the Q4 2026 and financial year 2026 QRTs stay on the current ITS, that the new QRTs apply from Q1 2027, and that the 2026 SFCR published in 2027 follows the current framework while the 2027 SFCR published in 2028 uses the new structure and audit. The draft also exempts templates due for deletion from the annual 2026 reporting. The draft RTS and revised guidelines from EIOPA’s July 2026 package, including the RTS on the simplified risk margin, follow the same three-month Commission decision route and are intended to apply from 30 January 2027.

National transposition is the third layer. Each Member State must publish its transposing law by 29 January 2027, and options such as extending the SFCR audit to small and non-complex undertakings and captives are national choices. Check your home supervisor’s consultation before assuming the EU minimum.

Where this lands in the software

QRT Tool handles the templates. When the 2.10.0 set applies from Q1 2027, the data connections you defined for Excel, CSV and database sources keep feeding the new templates, the validation engine picks up the new EIOPA rules and national validations, and the planning tool lets you set the 16 and 22 week annual deadlines per template with locking and four-eyes review. Multi-entity support covers group and solo filings from one login.

SCR Tool does the standard formula. The risk-free interest rate term structures and the symmetric adjustment are embedded and updated as EIOPA publishes them, so the new extrapolation and the plus or minus 13 percent corridor arrive with the published inputs. Results are shown in QRT format with every formula visible, and the Market-Risk-Constructor reuses asset data from QRT Tool.