The Insurance Recovery and Resolution Directive (IRRD) was adopted in January 2025 and will take full effect by January 2027. This new framework marks a major step toward a more resilient European insurance market. As implementation progresses, 2025 and 2026 serve as crucial transition years for insurers and service providers to adapt their systems, governance, and contingency planning.
What is the IRRD?
The IRRD establishes a single, EU-wide framework for how insurers should respond when facing financial difficulty. Its purpose is to protect policyholders, maintain the continuity of essential services, and prevent sudden failures that could disrupt the wider market.
Until now, each EU country has managed such situations differently, often leading to confusion in cross-border cases. By introducing one consistent rulebook, the IRRD brings greater clarity, stability, and coordination to how insurers across Europe handle financial distress.
Key requirements and timeline
- Recovery plans: insurers must prepare detailed “what-if” plans explaining how they would restore stability in a crisis.
- Early intervention: supervisors will be able to step in earlier if an insurer runs into trouble, for example by reorganizing operations to maintain stability.
- Cross-border coordination: national authorities will cooperate more closely, sharing data and aligning actions across borders.
With full implementation due by January 2027, the remainder of 2025 and 2026 are essential years for preparation and alignment.
Why it matters
The IRRD won’t immediately change daily claims handling, but it will influence how insurers prepare for and manage financial stress. A harmonized framework should lead to faster decisions, fewer delays in cross-border claims, and stronger protection for policyholders. For the industry, it represents a shift from reactive problem-solving to proactive resilience – building systems that can absorb shocks and maintain trust even in challenging times.
Looking ahead
As the IRRD moves from policy to practice, the focus will shift to putting regulation into action. Understanding these developments is essential for all market participants to stay aligned with the evolving needs of insurers, policyholders, and regulators across Europe.
(Sources: European Commission; Directive (EU) 2025/1 — Insurance Recovery and Resolution Directive; Stibbe 2025; Simon Braun 2025; Willkie Farr & Gallagher 2025.)
