IRRD: Resolution and recovery planning for insurers

The Insurance Recovery and Resolution Directive (“IRRD”) marks a significant shift for Irish regulated insurers and reinsurers. It introduces a harmonised EU framework for recovery and resolution, designed to improve preparedness for severe financial stress or failure, protect policyholders, preserve financial stability and reduce reliance on public funds.

For Ireland, IRRD is particularly relevant given the scale, cross-border nature and group connectivity of the market. Ireland is home to domestic insurers, reinsurers, captives, cross-border firms and subsidiaries or branches of international groups.

Recovery and resolution preparedness is therefore not only a local prudential issue; it is also a matter of policyholder protection, group alignment, cross-border coordination and operational continuity.

The Central Bank’s message is clear: IRRD will be implemented in a targeted and proportionate way. All firms fall within the broad framework, but only a subset will be subject to regular pre-emptive recovery planning or resolution planning.

Current Irish recovery planning requirements remain in force until revoked, and formal IRRD obligations will follow legal transposition.

Jean Rea

Partner

KPMG in Ireland

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Changes to the existing Irish regime

Irish insurers and reinsurers are already familiar with recovery planning under the Central Bank’s national framework. IRRD changes this position in two main ways: it replaces the current national recovery planning approach with a harmonised EU framework, and it introduces resolution planning for insurers and reinsurers, which is new for the Irish insurance sector.

Recovery planning remains focused on actions a firm can take to restore its financial position and viability during severe stress. Under IRRD, the framework will become more harmonised at EU level and the scope of mandatory pre-emptive recovery planning will become narrower than the current Irish national regime.

At their industry briefing in June, the Central Bank indicated that the existing national recovery planning requirements are expected to be revoked when IRRD comes into force, although firms should continue to meet current obligations until that point.

At least 60% of the relevant market must be covered by pre-emptive recovery planning.
Scope is expected to reduce materially compared with the current Irish regime, meaning many firms may no longer be required to submit regular pre-emptive recovery plans.
Recovery planning will move towards a two-year cycle.
There will be a greater emphasis on group recovery plans where relevant.
The substance of recovery planning is expected to remain broadly familiar, although plan structure and EU-level coordination will change.
Firms outside the regular planning population may still be asked to prepare recovery information if circumstances require it.
The Central Bank encouraged firms to maintain recovery planning disciplines as good risk management practice, even where formal submission is no longer required.

Resolution planning is new for the Irish insurance sector. Unlike recovery plans, which are prepared by firms and assessed by supervisors, resolution plans will be prepared by the resolution authority.

The Central Bank expects to be designated as the Irish resolution authority and has indicated that it will draw on its banking resolution experience while tailoring its approach to the insurance sector.

Resolution planning is intended to prepare for a scenario where a firm is non-viable and cannot recover. The resolution authority will consider whether resolution is necessary and proportionate in the public interest, including whether liquidation would deliver a better outcome.

For many firms, liquidation is expected to remain the appropriate strategy. Resolution is expected to be relevant where the firm’s failure could have material implications for policyholders, critical functions, market confidence, financial stability or public funds.

At least 40% of the relevant market must be covered by resolution planning.
The Central Bank will consider factors such as size, business model, risk profile, interconnectedness, substitutability, cross-border activity and potential policyholder or financial stability impact.
Critical functions will be a central concept, focusing on externally provided services whose discontinuance could materially affect policyholders, the real economy or financial stability and which are not readily substitutable.
Resolution tools may include sale of business, bridge undertaking, solvent run-off and bail-in or write-down and conversion powers.
Resolution planning will require focus on data readiness, outsourcing, intra-group dependencies, operational continuity and critical functions.

Why IRRD matters in Ireland

IRRD addresses a practical regulatory challenge: insurance firms can experience severe stress or failure, and fragmented national approaches can create uncertainty, unequal policyholder outcomes and coordination challenges, particularly for cross-border groups.

The Directive therefore establishes common recovery and resolution tools, planning requirements, authority powers and cooperation mechanisms across the EU.

The objective is not simply to produce more regulatory documentation. The objective is to ensure that, where an insurer or reinsurer enters severe distress, supervisors and resolution authorities can act in a timely, coordinated and proportionate way and firms can provide the information and operational support needed to support credible decisions.

This matters in Ireland because many firms write cross-border business, operate within wider EU or third-country groups, rely on group platforms or outsourced service providers, and use reinsurance, investment management or intra-group support arrangements. These features mean that recovery and resolution preparedness must be considered at entity, group and cross-border levels.

IRRD should not be viewed as a narrow compliance exercise. For in-scope firms, the test will be whether recovery options are credible and whether the firm can support an authority-led resolution process with timely, reliable and decision-useful information.

IRRD may appear targeted, particularly for firms that expect to fall outside routine planning. However, firms may underestimate the effort in four areas.

Data is harder than policy interpretation

Firms may understand their business model but still struggle to produce granular, reconciled and decision-ready information quickly.
Group planning can obscure local issues

Irish policyholder, regulatory, operational and cross-border considerations need active local input.
Operational continuity is broader than outsourcing registers

Firms need to understand how services would continue if the entity, parent, service company or supplier were under stress.
Resolution planning changes the audience

Recovery plans are firm-led and supervisor-reviewed; resolution planning is authority-led and public-interest focused.

The Central Bank is developing its scoping methodology to determine firms in-scope of both recovery and resolution planning which will be kept under review.

The Central Bank will engage directly with in-scope firms to provide guidance on recovery and resolution planning requirements and anticipates that this engagement will informally commence in the second half of 2026.

They have noted that proportionality is a key consideration in determining in scope firms to ensure that insurance resolution planning requirements focus on firms whose failure would pose risks to policyholders and financial stability.

How KPMG can help

KPMG provide a range supports and across the Insurance and broad Financial Services sector. KPMG can support insurers, reinsurers and insurance groups through the transition to IRRD by combining regulatory interpretation, actuarial expertise, prudential risk management, governance experience, data capability and practical implementation support.

Whether you need assistance with recovery planning, resolution planning, or both, KPMG leverages proven methodologies and practical experience to provide comprehensive and effective solutions.

Client need	How KPMG can support
Understand likely IRRD impact	Scope assessment, obligations mapping, gap analysis, board paper and implementation roadmap.
Improve recovery planning	Benchmark existing plans, assess indicators and options, and enhance governance, scenarios and communications.
Prepare for resolution planning	Assess data, operational continuity, outsourcing, intra-group dependencies, liability structures and asset mapping.
Assess critical functions	Support critical function identification, substitutability assessment and policyholder impact analysis.
Support group alignment	Help Irish subsidiaries and branches engage with EU or third-country group workstreams and evidence Irish-specific considerations.
Prepare for Central Bank engagement	Develop regulatory briefing packs, Q&A preparation, evidence trackers and readiness materials.
Build board and executive understanding	Prepare decision-focused board papers, executive workshops and accountable action plans.

Conclusion

IRRD is a targeted but important change for the Irish insurance market. It narrows routine recovery planning, introduces resolution planning and places greater emphasis on preparedness, data, operational continuity and cross-border coordination.

IRRD marks a shift from recovery planning as a mainly national supervisory requirement to a broader EU framework for recovery, resolution and failure preparedness. For some firms, formal recovery planning requirements may reduce. For others, the preparation burden may shift towards resolution readiness, data capability, operational continuity and group coordination.

For all firms, the direction of travel is clear: boards and management teams should understand the regime, assess likely implications and use 2026 to prepare in a proportionate and practical way.