Solvency II
Solvency II Directive
Definition
The EU directive establishing a risk-based framework for the regulation and supervision of insurance and reinsurance undertakings. Solvency II operates on a three-pillar structure covering quantitative capital requirements, governance and risk management, and disclosure and reporting.
Regulatory Context
In force since January 2016, Solvency II replaced the previous Solvency I regime. The UK retained an onshored version post-Brexit and is reforming it through Solvency UK to better suit the domestic market, particularly around the risk margin and matching adjustment.