The European Parliament and the Council agree on updates to the Solvency II framework and the introduction of a Resolution Directive for insurance undertakings
On 14 December, it was announced that the European Parliament and the Council have reached an agreement on updates to the Solvency II Directive and the introduction of a new Insurance Recovery and Resolution Directive ("IRRD"). The changes are aimed, among other things, at providing additional incentives for insurance undertakings to make long-term investments in order to contribute to the economy and the green transition. The changes also include measures to strengthen the resilience and stability of the insurance sector. This will also serve to strengthen customer protection by improving protection for customers in the event that insurance companies encounter financial difficulties. Under the agreement, the IRRD will mean that each Member State is required to designate a resolution authority in a similar way to the system already applying in the banking sector. Insurance companies must then produce resolution plans as a preventive measure and notify the resolution authority of them. Further changes consist of stronger consumer protection in cross-border insurance policies and a reduction in the administrative burden for small and non-complex insurance companies.
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