European Commission adopts new Solvency II technical standards on group identification and cross-border supervision

The European Commission has adopted a new Delegated Regulation supplementing the Solvency II Directive, introducing regulatory technical standards aimed at enhancing group supervision and strengthening oversight of cross-border insurance activities within the European Economic Area. The Regulation follows the amendments introduced by Directive (EU) 2025/2 and seeks to promote greater supervisory convergence across Member States.

The new framework provides supervisory authorities with more detailed criteria for identifying insurance and reinsurance undertakings that are under dominant or significant influence, as well as undertakings that are managed on a unified basis. Importantly, the Regulation recognises that certain group structures may exist even in the absence of traditional capital links, allowing supervisors to assess a broader range of arrangements and relationships when determining whether undertakings form part of a group.

To assist supervisors in making these determinations, the Regulation sets out a series of qualitative and quantitative factors, including the ability to influence decision-making, strong financial or operational reliance between undertakings, coordination of financial or investment decisions, and the existence of coordinated business strategies, operations or processes. Supervisory authorities are required to assess these factors holistically and on a case-by-case basis, rather than relying on any single criterion in isolation.

A further key development concerns the supervision of cross-border insurance business conducted under the freedom to provide services or the right of establishment. While Article 152aa of Solvency II already provides that cross-border activities generating annual gross written premiums exceeding €15 million are considered significant, the Delegated Regulation now establishes the conditions and criteria that host supervisory authorities should apply when assessing whether activities are otherwise relevant to their domestic market.

In this respect, host supervisors will be required to consider factors such as the concentration of an undertaking’s activities within the host market, its market share, the impact of its activities on particular lines of business or insurance products, and the potential consequences for policyholders and beneficiaries. Specific indicators may include premium volumes, technical provisions, the number of policyholders or insured persons, market concentration, levels of consumer complaints, and the availability of substitutable products within the relevant market.

The Regulation reflects increasing regulatory focus on cross-border insurance business following a number of high-profile insurer failures in recent years. It is intended to facilitate earlier identification of risks, improve cooperation and information-sharing between home and host supervisory authorities, and enhance policyholder protection throughout the EU.

For insurance groups and insurers operating on a cross-border basis, the new rules are likely to increase supervisory scrutiny of governance structures, operational dependencies, outsourcing arrangements, and the manner in which cross-border business is conducted. Firms should therefore assess whether existing arrangements could potentially fall within the expanded criteria for group identification and whether their cross-border operations may be regarded as particularly relevant by host supervisory authorities.

The Delegated Regulation will enter into force on the twentieth day following its publication in the Official Journal of the European Union and will be directly applicable in all Member States.