European Insurance and Occupational Pensions Authority issues revised Solvency II Guidelines for the supervisory review process and standard formula market and counterparty risk treatment

The European Insurance and Occupational Pensions Authority (EIOPA) has published revised Guidelines on the supervisory review process and on the treatment of market and counterparty risk exposures in the standard formula, updating the supervisory framework to reflect the Solvency II review. The revisions focus on clarifying and streamlining existing rules and extending coverage to emerging risks, with targeted amendments intended to support implementation and promote supervisory convergence across the European Union. For the supervisory review process, the revised text aligns expectations with recent regulatory developments and supervisory practices and adds processes addressing risks and trends that have emerged since the 2015 Guidelines. New sections cover business model analysis, joint on-site inspections, early intervention measures, pre-emptive recovery planning and supervision of conduct of business, alongside guidance to integrate sustainability risks, IT and cyber risks and Supervisory Technology (SupTech) into supervisory review. For the market and counterparty risk standard formula Guidelines, changes mainly update legal references and streamline the text, including deletion of four Guidelines, amendments that broaden the application of some provisions and a new Guideline clarifying the treatment of leveraged funds. EIOPA notes that both revisions incorporate experience from national competent authorities and stakeholder feedback from public consultations launched in July 2025 (supervisory review process) and December 2024 (market and counterparty risk exposures).