ADJUSTMENT OF THE SOLVENCY II REGULATORY FRAMEWORK TO NEW RISKS AND CHALLENGES OF MODERN CORPORATE GOVERNANCE

Solvency II, as a regulatory framework that systematically governs the op- erations of (re)insurance companies in the European Union, has been in force since 2016. Since then, the Directive has significantly contributed to the stabilization of the insurance market and better protection for policyholders, thanks to the imple- mented system of effective risk assessment and capital adequacy of companies. However, the application of the Directive to date has highlighted the potentially excessive capitalization of the EU insurance market and the need for investments in certain business segments. Among these, sustainable business practices with a focus on climate and environmental risks stand out. A particularly important innovation introduced by the amendments to the Directive is the additional introduction of proportionality criteria for small and non-complex companies, which, by applying this principle, should benefit in terms of reporting, disclosure, governance, technical provision calculations, and their own risk and solvency assessments. The proposed amendments offer several advantages, but they may be criticized for adding re- porting obligations and the potential overregulation that may arise during their implementation.

Keywords: Solvency II amendments, sustainability, climate and environmental risks, risk management, proportionality, small and non-complex companies