EIOPA Event - Solvency II proportionality framework

European Insurance and Occupational Pensions Authority (EIOPA) delivered an excellent and highly informative session on 1 July 2026 on the new Solvency II proportionality framework.

The session provided valuable insight into the policy rationale behind the reform to the framework and covered proportionality from both a small and non-complex undertaking/Group ("SNCU"/"SNCG") and a non-SNCU perspective.

We also heard from the Maltese Financial Services Authority ("MFSA") and the French Prudential Supervision and Resolution Authority ("ACPR"), which provided a useful perspective on how different National Competent Authorities ("NCAs") are approaching implementation.

In particular, it was interesting to hear about the notification form being used by the MFSA as part of the SNCU process, as well as the criteria developed by the ACPR for assessing proportionality measures for non-SNCUs/SNCGs.

A special thanks to all involved in delivering the session!

The session covered a considerable amount of material, and we have set out our 4 key takeaways below. Please do reach out if you would like to discuss the proportionality framework or other aspects of Solvency II reform in further detail.

Sinead Heavey

Associate Director

KPMG in Ireland

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1. Policy rationale behind the reform and proportionality framework

EIOPA noted that the current proportionality framework has been perceived as overly judgement based and difficult to operationalise consistently, resulting in limited and uneven use of proportionality measures across the market.

Proportionality is intended to make supervision more effective and risk-based, not less stringent. Under the new proportionality framework there is a new category of SNCUs and SNCGs based on simple qualitative and quantitative criteria.

Access to SNCU proportionality measures operates on a notification basis with a reversal of the burden of proof, where a supervisor must explain their reasoning if they disagree with an undertaking’s assessment.

Proportionality is a broader concept than SNCU’s, and non-SNCUs may also benefit from specific proportionality measures following an approval process.

SNCUs: The session covered the qualitative and quantitative criteria, captive specific considerations, proportionality measures available and the notification process. There was a particularly useful discussion on the technical document that EIOPA has published on the calculation of criteria.
Non SNCUs: The session also covered the framework applicable to non-SNCUs including the general conditions that apply horizontally to all proportionality measures (stability, capital adequacy, governance, size of undertaking, low complexity of business model).

2. Impact assessment

EIOPA presented a helpful impact assessment to understand the number of undertakings that can potentially identify as SNCUs. While a number of assumptions were required for this analysis, and actual outcomes may differ, the assessment provides useful insight into the potential scale of the SNCU framework.

Key findings include that approximately 660 undertakings across the EEA could potentially qualify as SNCUs, representing around 28% of the market. From an Irish perspective, approximately 76 undertakings could potentially fall within scope of the SNCU framework, representing a significant proportion of the Irish market.

3. NCAs' perspectives

MFSA

We heard from the MFSA who provided an excellent overview of work performed to date, brought us through the notification form to be used for SNCU in Malta and there was also a discussion on cross-border considerations.

Interestingly, their expectation is about 30% of all undertakings are expected to fall within the SNCU category, while a significant number of undertakings (approx. 40% - 50%) are expected to apply to benefit from proportionality measures.
ACPR

We also heard from the ACPR who discussed the approach taken in France in relation to proportionality framework for non SNCUs.

Survey results indicated that nearly two thirds of non SNCU/SNCG respondents plan to seek approval for use of proportionality measures. Due to the high number of applications expected, the ACPR will issue several “instructions” (for procedural aspects) and guidance related to proportionality to provide undertakings with transparency, while leaving room for expert judgement in specific cases and ensure consistent handling of applications.

The ACPR will be holding a dry run of application process in September to prepare the implementation of Solvency II proportionality framework

4. Key takeaways: proportionality and the broader Solvency II changes

Although the main focus of the session was proportionality, several wider Solvency II review topics were also briefly discussed. We have included these below for those also interested in broader regulatory developments.

MFSA questions for senior management and boards
As part of its consultation process the MFSA included some questions that were intended to stimulate and provoke internal discussion with key function holders, senior management and the board of directors.

Examples of some of these questions included:
- What operational or data challenges do you anticipate in meeting the SNCU criteria?
- How is the undertaking preparing towards any changes in relation to the revised governance requirements?
- What changes will be required in your governance structure to meet the new independence and diversity expectations?
- How is the undertaking implementing the necessary changes to the ORSA process and report to integrate the changes brought about the amending directive?
Deprioritisation of some measures

It was confirmed that several level 2 measures have been deprioritised, including the regulatory technical standards relating to sustainability risk management plans and exceptional sector wide shocks, which are not expected to be adopted before October 2027.
Streamlining of reporting and disclosure and EIOPA Initiatives on simplifications and burden reduction (“SBR”)

There was a discussion on reporting reduction both on the SFCR and on the QRTs with an estimated reduction of 26% in quarterly templates and a 30% reduction in annual templates for solo undertakings.

EIOPA initiatives on SBR were discussed across Solvency II (reporting reduction, review and streamlining of Solvency II guidelines and supporting the new framework on proportionality) and extends beyond Solvency II to other policy areas including IRRD, DORA, Sustainability, RIS and the AI Act.

EIOPA will postpone the next EU-wide bottom up insurance stress test from 2027 to 2028 to allow the industry to focus on Solvency II and IRRD implementations and the upcoming IORP stress test exercise will also be postponed.