Insurance Recovery and Resolution Directive – Estimated Implementation Timeline

In early November 2024, the Council of the European Union adopted legislation aimed at introducing new rules on insurance recovery and resolution. The Insurance Recovery and Resolution Directive (“IRRD”) is designed to create a framework for a pre-emptive recovery planning and resolution regime to ensure that insurers and relevant authorities in the European Union are better prepared for situations of significant financial distress and to facilitate early and quick intervention of the authorities, even across borders. The IRRD will establish harmonised recovery and resolution tools and procedures, with enhanced cross-border cooperation between national authorities with the intention to create an anticipatory approach to protect insurance policyholders, minimise the impact on the economy and the financial system and avoid recourse to taxpayers’ money.

Insurance and reinsurance companies that fall within scope will have to draw up and submit pre-emptive recovery plans to national authorities established for the purpose by member states and vested with preventative powers to intervene. Resolution authorities will also have to draw up resolution plans for insurance and reinsurance undertakings and groups which will provide the authorities with resolution tools and procedures to address failures, notably in a cross-border context.

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Author: Emma Cassar Torreggiani (Associate)