Solvency II
Applied since 2016, European Solvency II regulations aim to ensure that insurance and reinsurance companies can, at all times, pay the claims they have covered. “The aim is to prevent cases of bankruptcy, which could put policyholders in difficulty and, in the worst case scenario, lead to systemic risks”, comments Peter Vermeulen, a lawyer specialising in advising insurance players.
With this in mind, insurers must report a set of data annually: the equity capital they have available, to be put into perspective with their solvency ratio - which depends in particular on the assessment of the risks they have to cover -, supplemented by quarterly reporting on their assets and liabilities.
Following a recent review of the directive, changes will have to be transposed into national law by 29 January 2027. “Beyond technical improvements, the issue is to encourage the insurance industry to make the European economy more resilient by providing protection against a wide range of risks,” continues Peter Vermeulen.
Good news for reinsurance captives, of which Luxembourg, with almost 200 entities, is the leading domicile in the EU: “The changes to the Solvency II regime reduce the obligations for small and non-complex insurance and reinsurance undertakings”, comments the lawyer.
For insurers that distribute their products in other European countries, however, these developments call for greater vigilance. In particular, they give greater powers to the regulators in the countries where the Luxembourg insurer distributes its products,” continues Peter Vermeulen. In recent years, however, we have noticed that the regulators in several European countries have developed protectionist attitudes.”
For the lawyer, the freedoms of establishment and provision of services should be defended as fundamental rights. “However, asserting your rights before the European institutions can take years. When an Italian regulator imposes reporting requirements on you, or when a Belgian regulator bans your distributors from selling one of your products, you have to take a decision quickly.”
Changes to the Solvency II regime reduce the obligations of captives.
CSRD
By requiring large companies to report on their environmental, social and good governance commitments, the Corporate Sustainability Reporting Directive aims to support virtuous approaches. “The success of the CSRD is that it encourages people to take responsibility”, believes Peter Vermeulen.
While he applauds the intention, he nevertheless points to an “overzealous attitude” on the part of the regulator and experts with regard to “the formal reporting obligations defined”. The number and complexity of the data to be collected require significant resources,” he continues. Insurers subject to the CSRD have had to hire specialists. What is digestible for large global insurers like Axa or Allianz is difficult to take on for smaller insurers, like many in Luxembourg.”
For the lawyer, the key should lie “in assessing the impact of climate change on the insurance company on the one hand, and in analysing the impact that the insurance company has on climate change on the other, as provided for in the double materiality analysis. From there, priorities can be set and the CSRD becomes a real tool for sustainable management.”
Aware of this “overzealousness,” the EU has decided to revise its stance. “The number of companies falling within the scope of the CSRD, as well as the level of detail required in the reporting, will be reduced,” explains Peter Vermeulen. In its original version, the directive applied to companies with more than 500 employees. According to the political agreement reached between the European Parliament and the Council on 9 December 2025, this threshold is increased to 1,000.
“In view of these developments, the Luxembourg government has frozen the legislative process aimed at transposing the first version of the CSRD into national law,” the lawyer continues. “Many Luxembourg insurers, concerned by the original version, will no longer be affected under the new framework.”
Dora
Since 17 January 2025, the Digital Operational Resilience Act (Dora) requires insurers to anticipate digital risks and ensure operational continuity through enhanced cyber security.
Companies are also required to report any major IT incidents to the Office of the Insurance Commissioner. “By placing responsibility for these issues on the board of directors in particular, Dora establishes a stronger framework than was previously required,” explains Peter Vermeulen.
229%
The average Solvency Capital Requirement (SCR) cover, for non-life insurance players in Luxembourg, was 229% in 2024. The CAA refers to a “very comfortable solvency surplus”. In life, this coverage rate was 164%.
This article was written for the January 2026 insurance supplement of Paperjam magazine, published on 10 December. The content is produced exclusively for the magazine. It is published on the site to contribute to Paperjam’s comprehensive archive. Click this link to subscribe to the magazine.
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