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Solvency II report
Insurance consulting Insurance market insight Part VII and Section 13 transfers Risk management Solvency IILCP’s ninth annual analysis of Solvency II reports from 100 of the largest non-life insurers in the UK and Ireland.
From insight to action: managing risk in an era of transformation
Our latest Solvency II report reveals a slight dip in overall market solvency coverage from 198% to 194%. This was driven by Irish insurers, whose average ratio fell from 196% to 178%, citing higher dividends, market conditions and changes in risk profile as key drivers to the reduction.
After three years of double-digit gross written premium growth, early signs of market softening are starting to come through.
Key risks discussed in the report include:
- Geopolitical risk: Continues to be a key theme in SFCRs. While many insurers focused on the conflicts in Ukraine and the Middle East, others acknowledged broader instability including rising nationalism and protectionism.
- Cyber risks and climate change risks: These remain top concerns for insurers. However, there is a clear shift toward action: many are strengthening cyber exposure management, while others are advancing catastrophe modelling and climate risk monitoring. and
- Emerging risks: The most commonly mentioned are ‘forever chemicals’, and social risk. Many firms reported using structured frameworks, such as risk registers and scenario testing to better assess emerging risks.
Explore our Solvency II report
Read nowThis year’s Solvency II analysis paints a picture of a market at a turning point. After a period of sustained premium growth, we’re now seeing early signs of softening, particularly in specialist lines where competition is intensifying.
Wendy Kriz Evans Principal and author of the report
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Previous Solvency II reports
Access previous versions of our annual reviews of SFCR reporting.
2024: Balancing risk and opportunity in an uncertain world
Read the report2023: Navigating evolving and emerging risks
Read the report2022: Growing financial strength
Read the report2021: Change on the horizon
Read the report2020: Risk, resilience and recovery
Read the reportYour questions answered
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Solvency II is the EU-wide regulatory framework for insurance companies, designed to ensure they hold enough capital to meet their obligations and protect policyholders. It sets rules on capital requirements, risk management, and public reporting. In the UK, Solvency II has been adapted into “Solvency UK” post-Brexit, with more flexible rules tailored to the local market.
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The solvency coverage ratio is a key measure of an insurer’s financial strength. It’s calculated by dividing eligible own funds by the Solvency Capital Requirement (SCR). A ratio above 100% means an insurer has more capital than required by regulation. In 2024, the market average was 194%, although Irish insurers saw a sharper decline than UK counterparts.
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Insurers are paying close attention to climate change risks, cyber threats (often linked to geopolitical tensions), and emerging issues such as PFAS (“forever chemicals”) liabilities. People risk — including skills shortages and workforce wellbeing — is also gaining prominence, alongside market challenges from early signs of a softening rate environment.
