"A pure placebo": GDV takes issue with planned Solvency II reform

The German Insurance Association (GDV) is sharply criticizing the plans of the European supervisory authority (EIOPA) to simplify Solvency II reporting requirements. The consultation, which concluded in October 2025, was supposed to bring significant relief – but the GDV believes the intended goal has been clearly missed.

"Fewer reporting forms and differentiated requirements for smaller and larger companies are fundamentally correct approaches – but at the same time, new reporting obligations are also planned. The intended relief is thus hardly discernible," said GDV General Manager Jörg Asmussen , criticizing the reform plans. For many companies, this is a mere placebo, not an effective simplification.

New reporting requirements counteract relief goals

Particularly problematic: While EIOPA intends to eliminate some reporting templates (QRTs), the authority is simultaneously planning new reporting requirements. In the future, insurers will also be required to report on natural catastrophe risks and pension data – requirements that, according to the German Insurance Association (GDV), are sometimes being introduced without convincing substantive justification and will entail considerable effort for implementation.

The association doubts that the reform will achieve the EU Commission's goal of reducing administrative burdens in the financial sector by 25 percent. The bottom line is that the bureaucratic burden is likely to be reduced only marginally.

Proportionality helps only a few

With the reform, EIOPA is pursuing a so-called proportionality approach: smaller, less complex insurers should benefit from simplified requirements, while larger providers are subject to more comprehensive requirements. This basic idea is correct, according to the GDV. However, only a few companies, representing a small portion of the market, would benefit from the proposed simplifications. Insurance groups, on the other hand, would largely be excluded from the relief.

The reporting requirements under Solvency II have their origins in the 2008 financial crisis. At that time, the US insurance giant AIG was on the verge of collapse after suffering massive losses from risky credit derivatives. The Federal Reserve had to bail out the company with $85 billion—a shock that prompted Europe to fundamentally reform its insurance oversight.

The Solvency II framework, which came into force in 2016, was designed to ensure that insurers always hold sufficient capital to cover their risks. Unlike under the outdated predecessor system, Solvency I, capital requirements are now based on each company's actual risk profile—no longer on blanket formulas.

The system is based on three pillars: quantitative capital requirements, qualitative governance requirements, and comprehensive reporting obligations to regulators and the public. The latter, in particular, are considered particularly burdensome.

Now, nine and a half years after the introduction of Solvency II, the EU aims to modernize the regulatory framework. The reform, planned for January 2027, is intended to reduce bureaucracy and make the system more practical . A key component: the revision of reporting requirements.

Key elements of the reform include a significant reduction in the so-called risk margin – a safety buffer that insurers must maintain. In the future, this will be automatically reduced by four percent annually until it reaches at least 50 percent of its original value. In addition, the Commission is lowering the cost of capital to 4.75 percent.

The Solvency and Financial Report (SFCR), often over 100 pages long and barely understandable for laypeople, is also to be reformed: Part A will in future be aimed at insurance customers with a maximum of five pages in simple language, while Part B will continue to contain the technical details for experts.

Smaller insurers with less than €15 million in premiums (previously €5 million) will be subject to simplified rules in the future. And the conditions for long-term equity investments will be improved: Insurers must demonstrate, through two tests, that they can hold shares long-term – but in return, they will receive more favorable capital requirements.

What experts say about the reform

Lukas Linnenbrink, insurance professor at Dortmund University of Applied Sciences, confirms the progress : Solvency II has significantly improved the risk culture in insurance companies. "There is now a greater awareness that taking risks costs money," says Linnenbrink.

However, he expressed skepticism about the planned simplification of the SFCR: "Given the limited significance of the solvency ratio alone, a differentiated presentation should remain the goal." The ratio is based on complex valuation models, is only comparable between companies to a limited extent, and does not allow for direct statements about economic strength or future viability. However, Linnenbrink also doubted that the five-page summary would lead to a better public perception – "it's still worth a try."

Götz Treber, Head of the Competence Center for Corporate Management and Regulation at the German Insurance Association (GDV), particularly criticized the changes to the risk margin, stating that the cost of capital rate of 4.75 percent was too high. Linnenbrink also believes that greater relief would be possible here.

For German life insurers with their long-term products, it is important that long-term assessment criteria remain stable, Treber emphasized. "And this is precisely where the draft should be improved, in our view: It cannot be ruled out that the criteria could shift at an important point in the coming years."

What happens next?

EIOPA plans to present a final proposal in spring 2026, which must then be adopted as a legal act by the EU Commission. The amended Solvency II Directive is scheduled to enter into force on January 30, 2027.