Directive on IRRD

The Solvency II Directive reduced the likelihood of non-viability situations and improved the resilience of the European Union’s insurance sector. The proposal for a Directive on the recovery and resolution of insurance and reinsurance undertakings, known in the industry as the IRRD, complements the Solvency II Directive by establishing a framework for greater convergence at European level on resolution procedures for insurance and reinsurance undertakings. By the end of 2022, the EU Council agreed a negotiating mandate with the European Parliament on the IRRD with the aim of approving an agreement on the final text.

Executive summary

The proposed Directive on the Recovery and Resolution of Insurance or Reinsurance Undertakings (IRRD) sets out the requirements for pre-emptive recovery planning and resolution planning, as well as the procedure and conditions for resolution.

Main content

This Technical Note summarises the main building blocks of the IRRD:

• Pre-emptive recovery planning. Insurance and reinsurance undertakings which are not part of a group subject to pre-emptive recovery planning, as well as group parent undertakings, must draw up and maintain up to date pre-emptive recovery planning.
• Resolution planning. Resolution authorities should draw up resolution plans for each undertaking setting out the resolution actions to be taken in the event that the insurance or reinsurance undertaking meets the conditions for resolution. Resolution authorities may require insurance or reinsurance undertakings or the parent undertaking to provide them with all the information necessary to draw up and implement resolution plans.
• Resolution procedures. An insurance or reinsurance undertaking should be placed in resolution when it is failing or likely to fail and there is no prospect that private sector alternatives or supervisory measures can avert failure. Where the conditions for resolution are met, different powers and tools available to carry out resolution are set out.

Next steps

• This Directive shall enter into force 20 days after its publication.
• The final text is expected to be adopted in 2023.
• Member States must transpose it into national law no later than 18 months after its entry into force.
• EIOPA will develop ten technical standards and six guidelines implementing certain parts of the Directive at the latest 18 months after its entry into force.

Download the technical note on Directive on Recovery and Resolution of Insurance or Reinsurance Undertakings (IRRD) (available only in Spanish).