Recovery planning for insurance undertaking

In relation to recovery planning, the package includes two draft Regulatory Technical Standards (RTS) covering the content of pre‑emptive recovery plans and the criteria used to determine which firms are required to prepare them.

These measures provide further clarity on how recovery planning requirements are expected to be applied in practice. They are most relevant for insurance and reinsurance undertakings and groups that fall within scope of the IRRD, as identified by supervisory authorities in each Member State using criteria such as size, business model, risk profile and interconnectedness. With the IRRD expected to apply from 2027, the measures represent an early indication of the standards firms may need to meet.

Draft RTS on the content of pre-emptive recovery plans

The draft RTS specify the minimum content that pre‑emptive recovery plans are expected to include, such as:   

• A description of the undertaking or group and its structure.
• A framework of quantitative and qualitative recovery indicators.
• A range of potential recovery actions.
• A communication strategy covering internal and external stakeholders.

The objective is to ensure that recovery plans are usable in practice and can be activated in a timely manner in the event of a material deterioration in financial position. For example, a firm may need to show whether it could raise capital, improve liquidity, reduce risk exposure or sell part of a business if its solvency or liquidity position came under pressure. EIOPA has also emphasised proportionality, including simplified credibility and feasibility assessments and the use of cross‑references to existing supervisory documentation, such as own risk and solvency assessment (ORSA) reports.

Draft RTS on criteria for pre-emptive recovery planning requirements and market shares

EIOPA has also published a draft RTS setting out:

• The criteria for determining which (re)insurance undertakings and groups are required to prepare pre‑emptive recovery plans.
• The methods used when determining market share for the purposes of those requirements.

The standards aim to ensure that firms representing at least 60% of the relevant market are covered by recovery planning requirements. This market coverage is applied within each Member State, using supervisory data and methods set out in the RTS, rather than a single EU‑wide measure or a simple count of customers. Supervisory authorities are permitted to rely on existing supervisory data, including ORSA and liquidity risk management information, when assessing scope and calculating market shares. This approach is intended to limit additional data requests and reduce administrative burden.

What firms should consider

These measures are likely to be most relevant for insurers and groups that fall within scope of the IRRD’s recovery planning requirements. Firms may wish to review their recovery planning, governance and operational arrangements against the emerging standards, particularly in areas such as recovery indicators, recovery options and supporting supervisory information.

How Forvis Mazars can help

Our prudential risk experts recognise that the IRRD and related supervisory developments remain a key driver of strategic and governance priorities for institutions. We support clients in reviewing recovery planning frameworks, governance arrangements and supporting documentation against emerging supervisory expectations. We work closely with our clients to identify their regulatory responsibilities and support firms in achieving full compliance.