EIOPA updates its Guidelines on supervisory review process and on market and counterparty risk exposures following Solvency II review

The European Insurance and Occupational Pensions Authority (EIOPA) published today two revised Guidelines on the supervisory review process and on the treatment of market and counterparty risk exposures in the standard formula. The primary objective of the revision is to update the Guidelines in view of the Solvency II review, by clarifying and streamlining existing rules, and by bringing emerging risks within their scope.

In line with its commitment to regulatory simplification, EIOPA has deliberately limited the amendments to those that are strictly necessary to support the implementation of Solvency II and to promote supervisory convergence across the European Union. EIOPA paid due attention to the objectives of regulatory simplification and burden reduction, resulting in targeted and limited changes to the existing rules and suppression of some guidelines.

Revised Guidelines on supervisory review process

The amendments to the Guidelines pursue two key goals: first, to align the existing provisions with the latest regulatory developments and new supervisory best practices; and second, to incorporate new processes to address risks and trends that have emerged since the Guidelines were first adopted in 2015. 

To reflect the outcome of the Solvency II review and in order to ensure more effective supervision and financial stability in Europe’s insurance sector, the draft Guidelines include new sections in areas such as business model analysis, joint on-site inspections, early intervention measures, pre-emptive recovery planning, and the supervision of conduct of business. In response to the growing importance of emerging risks, EIOPA also introduced guidance to ensure that supervisory authorities incorporate sustainability risks, IT and cyber risks, and Supervisory Technology (SupTech) into their supervisory review processes.

These Guidelines are of primary relevance to national supervisory authorities but are expected to indirectly benefit insurers and reinsurers by enhancing the consistency, predictability, and transparency of supervisory engagement.

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Revised Guidelines on the treatment of market and counterparty risk exposures in the standard formula

The revised Guidelines include amendments to update legal references and to clarify and streamline the text. In particular, four Guidelines are deleted. Some Guidelines are amended to broaden their application, and a new Guideline is introduced to clarify the treatment of leveraged funds.

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Background

The initial Guidelines on Supervisory Review Process and were first released in 2015, including 42 guidelines. EIOPA’s review is taking into account the experience of national competent authorities over the past years, as well as feedback from stakeholders following a public consultation launched in July 2025.

EIOPA issued the initial Guidelines on the treatment of market and counterparty risk exposures in the standard formula in 2015. EIOPA’s review is taking into account the experience of national competent authorities over the past years, as well as feedback from stakeholders following a public consultation launched in December 2024.