Pre-emptive recovery plans under the IRRD

The Insurance Recovery and Resolution Directive, Directive (EU) 2025/1, was published in the Official Journal on 8 January 2025. Member States must transpose it by 29 January 2027, and it applies from 30 January 2027. It gives EU insurers and groups a harmonised framework for recovery and resolution planning. For most insurers, the first practical task is the pre-emptive recovery plan.

Who needs a pre-emptive recovery plan

Not every insurer. Each supervisor must make sure that at least 60% of its national life and non-life markets are covered by pre-emptive recovery planning. Life market share is measured by gross technical provisions and non-life by gross written premiums. Supervisors choose which firms to include using factors such as size, business model, risk profile, interconnectedness, substitutability and cross-border activity. Separately, resolution authorities must make sure at least 40% of the market is covered by resolution plans.

What goes in the plan

A description of the undertaking or group and its governance.
A framework of indicators, which can cover capital, liquidity, asset quality, profitability, market, macroeconomic and operational factors. A breach of the SCR must be one of them.
A range of remedial actions that could restore the financial position.
A communication strategy.

When an indicator is met, the firm tells its supervisor promptly, even if it decides not to act. Plans are reviewed at least every two years, or sooner after a material change.

How it differs from what you already have

A Solvency II recovery plan is drawn up once the SCR is breached. A pre-emptive plan is written in business as usual, before anything has gone wrong. It may draw on the ORSA and the liquidity risk management plan, but its purpose is different: to show which actions are available, how quickly, and what each would achieve. If the SCR is ever breached, the pre-emptive plan is the starting point for the Solvency II plan.

EIOPA has drafted technical standards on the content of the plans, and has consulted on guidelines for the range of scenarios they should test. Check the final versions as they are published.

The actuarial work behind the plan

Calibrate the indicators. Set early-warning levels for the solvency ratio, own funds and liquidity that leave time to act, and document why.
Project the scenarios. Severe but plausible stresses, firm-specific and market-wide, projected through own funds and the SCR over the planning horizon.
Quantify each recovery option. For example reinsurance, de-risking the asset portfolio, suspending dividends or closing to new business: the effect on own funds and the SCR, and how long it takes.
Reuse the ORSA. Keep the projection engine, the basis and the scenarios consistent with the ORSA, so the two documents tell the same story.
Keep it reproducible. A plan reviewed every two years is easier to refresh if each projection can be re-run from recorded inputs and an approved basis.

Where AutoImpact stands

AutoImpact projects cash flows and values them on approved bases today, with mortality, longevity, lapse and expense stresses. Pre-emptive recovery plan indicators and ORSA projections with stress scenarios are in the second phase of the roadmap, after the Solvency II review work in Q1 2027. Tell us if you need them sooner; the order follows customer need.

Sources

This note is general information, correct as at 4 November 2026. It is not legal, accounting or actuarial advice. Check the sources for the current text.