Solvency II Review: What Changes on 30 January 2027

Directive (EU) 2025/2, adopted on 27 November 2024 and published in the Official Journal on 8 January 2025, revises the prudential regime for European insurers. Member States must transpose it by 29 January 2027, and the new rules apply from 30 January 2027. For teams that own a reporting chain, the date matters less than what precedes it: the first closing produced under the revised regime will use specifications that are still being finalised.

This article covers the changes that touch regulatory production directly, and what is worth preparing while the technical standards land.

Proportionality becomes a formal status

The most structural change for smaller undertakings is the creation of a formal category: the small and non-complex undertaking (SNCU), with an equivalent for groups.

Proportionality already existed in the directive as a general principle — requirements were to apply according to the nature, scale and complexity of risks. In practice it depended on supervisory dialogue and produced uneven outcomes across the Union. The review turns it into a status with eligibility criteria, defined reliefs, and automatic exclusions. EIOPA has published the identification criteria that national supervisors will apply.

Three practical points follow.

Eligibility is assessed on figures you already produce. The criteria draw on data that sits in your own reporting. Testing eligibility is a short exercise when those figures are traced and available, and a project when they must be reconstructed.

Exclusions are automatic in defined cases — using an internal model, or belonging to certain groups, removes eligibility regardless of size.

Not qualifying is not the end of the matter. Undertakings outside the SNCU category keep the ability to request specific proportionality measures. The status is one route, not the only one.

Where the reliefs apply — governance, own risk and solvency assessment, public reporting, valuation of technical provisions, liquidity management — they reduce the volume of work rather than the standard of it. The figures still have to be right.

The public report splits in two

The review changes the structure of the Solvency and Financial Condition Report. It becomes two distinct parts: one addressed to policyholders and beneficiaries, written to be understood without prudential expertise, and one addressed to market professionals, keeping the current level of technical detail.

For production teams this is more than a change of table of contents. The policyholder-facing part calls for accessible drafting that does not consist of shortening the technical part — a different exercise, and one that actuarial and accounting teams do not always carry. Firms that start structuring their content in two reading levels during the 2026 campaign will avoid reorganising an entire report under deadline pressure.

What moves in the capital calculation

Several changes feed the solvency capital requirement itself:

• the extrapolation of the risk-free interest rate curve is revised, which affects the valuation of long-dated liabilities;

• the treatment of interest rate risk is adjusted within the market risk module;

• long-term investment receives a revised treatment for certain holdings, part of the wider objective of mobilising insurance savings towards the real economy;

• sustainability risks enter risk management and the own risk and solvency assessment more explicitly, creating overlap with extra-financial reporting obligations.

Each of these lands eventually as a change in calibration or in template content. An engine whose calculation logic is documented and versioned absorbs that; one whose parameters are buried does not. We cover what to look for in that layer in SCR Calculation Software for Solvency II.

One directive, several national timetables

This is the point most easily missed by groups operating across the Union. A directive is transposed by each Member State into national law, and transposition carries local choices — in the exercise of national options, in the supervisory instructions that accompany them, and in the practical timing of their publication.

A group with entities in several jurisdictions will therefore face one European framework and several national implementations, each with its own guidance from its own supervisor. France, for instance, has already published supervisory instructions specifying how the proportionality measures apply locally, while other Member States are at different stages.

The operational consequence is worth planning for now: a group-level reporting chain must accommodate local variations without forking into parallel processes. The undertakings that handle this well are those whose chain separates what is common — data sourcing, calculation, lineage — from what is local, rather than duplicating the whole production per entity.

What to prepare while the standards land

Waiting for final technical specifications before starting is a common and expensive choice, because the work that takes longest does not depend on them.

Map what exists. Which templates, from which sources, through which controls, on which deadlines, owned by whom. This inventory is independent of the final content of the reform and is invariably the longest task.

Establish lineage. When a specification changes, the cost of the change is proportional to how well you can answer "where does this figure come from". A chain whose logic is spread across spreadsheets and individual memory absorbs a revision of this scale badly. The architecture that makes this tractable is described in Automating Solvency II Reporting.

Test SNCU eligibility on your own figures, and document the result — including a negative one, which is what supports a later request for specific measures.

Treat the own risk and solvency assessment as connected work, since both the reliefs and the new sustainability expectations reach it.

The framework itself holds

The review adjusts the regime rather than replacing it. Three pillars, an economic balance sheet, the solvency and minimum capital requirements, quantitative templates and narrative reports all remain the reference structure. Our complete Solvency II guide sets out those fundamentals, and the reporting architecture we describe elsewhere is the layer on which these changes will apply.

At Finengy we work on both sides of that boundary — the regulatory framework and the data chain that produces it — for insurers and bancassurers across Europe.

Assessing what the review means for your reporting chain? Request a demo.