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

Directive (EU) 2025/2 is the amending act behind the Solvency II review. Its title identifies seven broad subjects: proportionality, quality of supervision, reporting, long-term guarantee measures, macroprudential tools, sustainability risks, and group and cross-border supervision. Member States must apply their transposing measures from 30 January 2027. This article is a practical overview of selected operational impacts for reporting and actuarial teams. It ends with the implementation timeline and explains how our reporting and calculation tools pick up selected changes.

Firm-facing changes highlighted here include revised reporting and disclosure, a proportionality regime for small and non-complex undertakings, the long-term guarantee package (including the matching adjustment, extrapolation and risk margin), liquidity and macroprudential powers, sustainability requirements and group supervision. A full compliance review must also consider other changes to own funds, standard-formula capital requirements, supervisory powers and cross-border cooperation, which are not detailed here.

What Directive (EU) 2025/2 is

The directive was adopted on 27 November 2024 and published in the Official Journal on 8 January 2025. Article 1 amends Directive 2009/138/EC. Articles 2 and 3 also amend Directives 2002/87/EC and 2013/34/EU. The consolidated Solvency II text reflects the changes to Directive 2009/138/EC, but firms must apply the relevant national transposing measures from 30 January 2027.

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 sets quantitative eligibility criteria and exclusions for SNCU status. Article 29b governs notification and classification by the home-state supervisor. Criteria differ by business type and include a two-year look-back with exceptions. See Articles 29a-29b in Directive (EU) 2025/2.

The notification to the home-state supervisor must evidence eligibility, identify intended measures and declare that the undertaking does not plan a strategic change that would lead to non-compliance with any applicable Article 29a criterion within the next three years. The supervisor may oppose classification within two months of receiving a complete notification, and only on the grounds in Article 29b: failure to meet the criteria; SCR non-compliance assessed without specified transitional measures; or a share above 5% of the home-state life market or, where applicable, non-life market. For this test, life-market share is measured by gross technical provisions and non-life-market share by gross written premiums (Articles 29b(2)(b), 29b(3)(c) and 35a(1)). Without an objection, classification takes effect at the end of that period.

Meeting the thresholds alone does not confer SNCU status. For notifications received in the first six months after 30 January 2027, the objection period is four months. SNCUs may use Article 29c measures. Where serious concerns about an SNCU’s risk profile exist, the supervisor may request in writing, with reasons tied to those specific concerns, that it refrain from using one or more measures. Non-NCUs need prior approval under Article 29d for eligible measures. Approval may be amended or withdrawn if the risk profile changes. Article 29e requires SNCUs to report measures used within a year and notify changes.

Reporting and disclosure

Three things change for the reporting calendar. The regular supervisory report is required at least every three years for most undertakings. For SNCUs, the supervisor may permit an interval of up to five years (Article 35(5a)). Annual solo supervisory information is due within 16 weeks and the RSR within 18 weeks (Article 35b). Group annual information is due within 22 weeks (Article 254(3)). Quarterly information is due within five weeks for solo undertakings and 11 weeks for groups. The solo SFCR is due within 18 weeks of year-end (Article 51(7)). The group SFCR and group regular supervisory report are due within 24 weeks (Articles 256(1) and 256b(1)). Final reporting templates and their first application date depend on Commission adoption of the amended ITS.

The SFCR normally has two jointly disclosed parts: information for policyholders and beneficiaries, and information for market professionals. Article 51 provides exceptions: qualifying captives may omit the policyholder part, reinsurers may elect to omit it, and SNCUs may provide only prescribed quantitative market-professional data in ordinary years if they publish a full report at least every three years. Article 51a requires audit of the solo SFCR balance sheet, except for SNCUs and captive insurers or reinsurers. Member States may extend the audit requirement to those undertakings and to other parts of the solo SFCR. Article 256c separately requires audit of the group SFCR balance sheet and applies Article 51a mutatis mutandis. Article 51a(5) also preserves certain national registered-actuary arrangements. The applicable national and group audit scope must therefore be checked.

The reporting and disclosure templates are established through Commission implementing technical standards (ITS). 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 extrapolated beyond a first smoothing point, defined by deep, liquid and transparent markets and a sufficiently high share of all outstanding bonds in that currency having that maturity or longer. Article 77a(3) sets the euro first smoothing point at 20 years as of 28 January 2025. Article 77e(4) allows a first smoothing point set in an implementing act to change only if the share of bonds at or above a maturity within that currency indicates a different point and the Article 86(1)(b)(iii) percentage threshold is met for at least two consecutive years. Undertakings may use the Article 77a(2) extrapolation phase-in only with prior supervisory approval. Its convergence parameters are reduced linearly at the start of each calendar year, with the final parameters applying from 1 January 2032. For disclosure, Article 77e(1)(aa) provides for a risk-free curve without the matching adjustment, volatility adjustment or extrapolation phase-in.

Article 77d requires prior supervisory approval to use the volatility adjustment and sets minimum approval conditions. Member States may add conditions, so the precise framework depends on national transposition. Undertakings that applied a volatility adjustment before 29 January 2026 may continue without prior approval, provided they comply with the applicable prior-approval conditions under Article 77d(1) from 30 January 2027. Supervisors may require an undertaking to stop using the VA if the conditions are no longer met. It may seek approval again once compliance is restored. Article 77 sets the cost-of-capital rate at 4.75% from 30 January 2027 and specifies that the projected capital requirement carries an exponential, time-dependent element.

Article 106(3), as amended by Directive (EU) 2025/2, limits the symmetric adjustment so that the equity capital charge is no more than 13 percentage points below or above the standard equity capital charge. The review also changes the matching adjustment. For the SCR, undertakings using the matching adjustment may assume full diversification between the matching-adjustment portfolio and the rest of the undertaking where the best estimate of the insurance and reinsurance obligations does not form a ring-fenced fund. Delegated Regulation (EU) 2026/269 provides binding Level 2 rules from 30 January 2027. EIOPA submitted revised draft ITS on the matching adjustment to the Commission on 15 July 2026, and their status and application date depend on Commission adoption.

Macroprudential tools and liquidity

The directive adds a liquidity layer to Solvency II. Article 144a requires undertakings to maintain adequate liquidity under stress, keep liquidity indicators up to date, and prepare a short-term plan projecting asset and liability cash flows. Supervisors may request medium- and long-term analysis. SNCUs and undertakings with prior Article 29d approval are not required to prepare that plan, although their broader liquidity-management duties remain. Article 246a requires a group plan. A subsidiary may be exempt from its own plan where the group plan covers its liquidity needs, but its supervisor may still require one for a specific vulnerability or inadequate group information.

Under Article 144b(2), supervisors may require an undertaking to reinforce its liquidity position where material risks or deficiencies are supported by sufficient evidence and effective remedies are absent. These measures are reviewed at least every six months and removed once effective remedies are taken. The temporary measures in Article 144b(3) apply to individual undertakings whose material liquidity risks may imminently threaten policyholder protection or financial-system stability. Suspending redemption rights is a last resort, limited to life policyholders, and requires exceptional circumstances and the collective interest of policyholders and beneficiaries.

Supervisors must consider potential unintended effects on financial markets and policyholder rights, including across borders, and publish their reasons. Any measure under Article 144b(3) may last no more than three months. It may be renewed while its grounds remain and must end when they cease. Article 144b(3) sets no numerical limit on renewals. Until the suspension is lifted, the undertaking is subject to restrictions on distributions, share buy-backs, own-fund repayments and variable remuneration. Article 144c is a distinct regime for vulnerable undertakings during exceptional sector-wide shocks. Its specified measures are reviewed at least every three months and removed when their grounds cease. Article 44(2) also requires firms using the VA to assess whether liquidity constraints could conflict with it.

The ORSA must consider macroeconomic and financial-market developments and, on a reasoned supervisory request, relevant macroprudential concerns and input parameters. Supervisors may also request additional macroprudential analysis under Article 45(1)(e). SNCUs and undertakings with prior Article 29d approval are exempt from that specific additional analysis, but not from the ORSA or other risk-management duties. For subsidiaries, the supervisor must consider whether the analysis is already performed at group level and covers the subsidiary’s specific circumstances.

Group supervision and sustainability risk

Article 212 widens the group definition to include specified cases of central or common management, while Article 213 sets the perimeter for group supervision and its exclusions. The group supervisor classifies eligible groups under Article 213a using group-level tests, including cross-border premium limits. Financial conglomerates and other specified groups are excluded. Group classification is separate from each undertaking’s solo SNCU status. The amendments also strengthen cooperation and information-sharing among group, home and host supervisors for cross-border activity. National implementation and the facts of the group determine how those powers operate.

On sustainability, Article 44(2) requires strategies, policies, processes and systems for sustainability risks over the short, medium and long term. Article 44(2b) also requires specific plans with quantifiable targets and processes to address sustainability-related financial risks over those horizons. Article 44(2e) permits a group plan to cover subsidiaries where it reflects their relevant circumstances. Article 45a requires firms to assess and demonstrate whether climate exposure is material and, where it is, to specify at least two long-term scenarios: one below 2°C and one significantly above it. SNCUs remain subject to the materiality assessment and Article 44 requirements, but are exempt from specifying scenarios and assessing their business impact. The supervisor may nevertheless require an SNCU to refrain from that proportionality measure where the statutory serious-concern test in Article 29c(2) is met.

Timeline

Adopted acts and Level 3 implementation

Adopted and published: the directive itself and Delegated Regulation (EU) 2026/269, published in the Official Journal on 18 February 2026, which amends Delegated Regulation (EU) 2015/35.

EIOPA’s final report of 30 March 2026 records draft amendments to Implementing Regulation (EU) 2023/894 on supervisory reporting and Implementing Regulation (EU) 2023/895 on public disclosure as submitted to the Commission. The report states that Q4 2026 and financial year 2026 QRTs stay on the current ITS, and that the 2026 SFCR published in 2027 follows the current framework. EIOPA proposed the new QRTs for Q1 2027 and the new SFCR structure and audit for the 2027 report, to be published in 2028. Confirm those dates against any subsequently adopted ITS and its transitional provisions.

EIOPA’s 15 July 2026 package included draft technical standards, including the RTS on the simplified risk margin, submitted to the Commission. EIOPA said the Commission would decide on their adoption within three months. Check the Commission and EUR-Lex registers for subsequent decisions and application dates. The final EIOPA Guidelines in the package are separate Article 16 instruments. The draft standards are not binding unless adopted by the Commission.

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. EIOPA’s taxonomy 2.10.0 is intended for Q1 2027. Confirm Commission adoption of the reporting ITS and its application date before treating the templates as final. The data connections you defined for Excel, CSV and database sources keep feeding the applicable templates, the validation engine picks up applicable EIOPA and national validations. Multi-entity support covers group and solo filings from one login.

SCR Tool covers standard-formula calculations. Its published feature description says the risk-free interest-rate term structures and the equity symmetric adjustment are embedded. Results are presented in QRT format with formulas visible, and it is easy to load asset data from QRT Tool.