Preventive recovery plan for insurance companies in EU law

Čolović Vladimir (Pravni fakultet Univerziteta Union, Beograd), vladimir.colovic@pravni fakultet.edu.rs

There are numerous risks in the operations of insurance companies, which often lead to problems in fulfilling obligations in the insurance business, not limited solely to payments under insurance policies. Therefore, the question arises as to how to resolve the financial problems of an insurance company to avoid insolvency and enable further operation. EU law has previously provided procedures for resolving financial difficulties of insurance companies, primarily through the Solvency II Directive, which is a comprehensive act in the insurance industry. However, the act that regulates the above‐mentioned issues in more detail is Directive 1/2025 of the European Parliament and of the Council of 27 November 2024 establishing a framework for the recovery and resolution of insurance and reinsurance undertakings. This act focuses on the recovery of an insurance company through the adoption of a recovery plan that is implemented within a certain period and aimed at avoiding the resolution procedure, as well as other procedures that apply in the event of financial problems within the company. The recovery plan is implemented within the insurance company itself, while the resolution is implemented with the participation and control of external bodies. The paper outlines the basic characteristics of the recovery plan and examines the fundamental risks that accompany the operations of an insurance company. It also outlines the powers of supervisory authorities in implementing the recovery plan. Finally, the legislation of the Republic of Serbia is criticised for failing to regulate this matter.

Keywords: insurance company, business risks, preventive measures, recovery plan, resolution, supervision