Solvency II revision – implications for insurers in Ireland

For insurers operating in Ireland, these developments come at a time of heightened complexity. Business leaders continue to cite economic uncertainty and intensified competition as the main constraints on growth, while regulatory requirements remain a key external pressure shaping strategic decision-making. Against this backdrop, the Solvency II review is not just a technical adjustment, it is central to how insurers balance risk, capital and growth. 

Pillar 1: capital requirements and long-term investment

Changes under Pillar 1 focus on refining capital requirements, including adjustments to the risk margin and the treatment of long-term guarantees. These reforms are designed to reduce unnecessary volatility and improve insurers’ ability to invest in long-term assets such as infrastructure and sustainable projects.

This is particularly relevant in Ireland, where sustainable investments have emerged as a priority alongside continued focus on technology transformation as reported in our 2026 C-suite Barometer report. At the same time, organisations are adopting a more cautious approach to investment, with the proportion of Irish businesses increasing financial investment declining year-on-year.

In this context, reforms that support more efficient capital deployment could play an important role in enabling insurers to invest with greater confidence. In particular, they can help insurers to:

• Allocate capital more efficiently across portfolios.
• Increase participation in long-term assets such as infrastructure.
• Support sustainable investment aligned with strategic priorities.
• Reduce unnecessary volatility in solvency positions.

These changes can help channel capital into productive and sustainable areas of the economy.

Pillar 2: governance, risk management and supervision

Under Pillar 2, the review places continued emphasis on robust governance, risk management and effective supervision. Enhancements in this area aim to ensure that insurers are better equipped to respond to emerging risks while maintaining strong internal controls.

For Irish insurers, this aligns with a broader shift in the operating environment. Leaders report that organisations are responding to a combination of pressures, including:

• Ongoing economic uncertainty.
• Increased competition across markets.
• Rising regulatory and compliance expectations.

At the same time, confidence in managing these pressures remains measured, with just 35% of executives saying they are “very confident” in their ability to navigate key trends.

This underlines the importance of clear supervisory expectations and proportionate governance requirements, both of which are central to the Pillar 2 reforms.

Pillar 3: reporting, transparency and proportionality

Pillar 3 focuses on enhancing reporting and disclosure requirements, while also improving proportionality to reduce unnecessary burden on smaller and less complex firms.

These changes come at a time when regulatory compliance is becoming increasingly prominent on the agenda of Irish organisations. As reporting requirements grow in scope and complexity, there is a clear need to strike the right balance between transparency and operational efficiency.

The emphasis on proportionality is therefore particularly welcome. It provides an opportunity to streamline reporting processes while maintaining the high standards of transparency that underpin confidence in the insurance sector.

Enhancing competitiveness in a global market

A core objective of the Solvency II revision is to ensure that Europe’s insurance sector remains competitive internationally. For Ireland, this is a critical consideration.

As a key hub for cross-border insurance activity, Ireland’s attractiveness is closely linked to the strength, clarity and predictability of its regulatory framework. The outward-looking nature of Irish organisations reinforces this, with 70% planning to expand internationally over the next five years.

A calibrated Solvency II framework can support this by enabling insurers to operate efficiently across markets, while maintaining alignment with global regulatory standards.

A framework for resilience and growth

The Solvency II review reflects a broader evolution in how insurers operate, balancing prudential strength with the need for flexibility and growth.

This is particularly important in the current environment, where Irish organisations are navigating a complex mix of uncertainty, competition and regulatory change. While confidence is improving, leaders remain cautious in their outlook, reinforcing the need for stability and clarity in the regulatory landscape.

Looking ahead

For insurers in Ireland, the revised Solvency II framework provides an opportunity to strengthen resilience, optimise capital and support long-term investment.

Its success will depend not only on the technical details of the reforms, but also on how effectively firms integrate these changes into their broader strategies. In practice, this will require insurers to:

• Assess the impact of changes on capital and solvency positions.
• Align regulatory requirements with long-term business strategy.
• Refine asset–liability management approaches.
• Strengthen governance, risk and reporting processes.

In an environment defined by uncertainty and change, the ability to align regulatory compliance with business objectives will be key.

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