INSOLVENCY OF INSURANCE ENTERPRISES

Study XC – Legal Guide on the Insolvency of Insurance Enterprises and Harmonisation of National Regimes

Since the global financial crisis, it has become increasingly clear that the failure of insurance enterprises (insurers) can generate systemic implications and negative externalities due to their special characteristics and interconnectedness with the wider financial system. International efforts have therefore focused on developing frameworks for the resolution of insurers whose failure could give rise to systemic risks.

However, less attention has been paid to the design of liquidation frameworks and means to address the failure of non-systemic insurers. As a result, international guidance in this area remains limited, and jurisdictions continue to rely on divergent approaches. This fragmentation hinders cross-border coordination, complicates the application of resolution safeguards such as the “No Creditors Worse Off” principle, and often leaves insurer failures subject to general business insolvency frameworks that are ill-equipped to address the specific features of the insurance sector.

UNIDROIT’s project on the Insolvency of Insurance Enterprises aims at developing guidance for legislators and policymakers on the key features of effective liquidation frameworks for insurers. Conceived as a direct follow-up and complement to the Unidroit Legislative Guide on Bank Liquidation (2025), the project seeks to promote convergence among national regimes by providing international guidance and recommendations tailored to the insurance sector.

 

Background

In April 2025, UNIDROIT received a proposal from the Italian Institute for the Supervision of Insurance (IVASS) for a project on the insolvency of insurance enterprises and harmonisation of national regimes (see Unidroit 2025 – C.D. (105) 4 rev., Annex II). Highlighting the fragmentation of domestic insolvency laws applicable to insurers and referencing the successful completion of the Unidroit Legislative Guide on Bank Liquidation in 2025, IVASS proposed a follow-up project to address insurer liquidation.

At its 105th session (Rome, 20-23 May 2025), the UNIDROIT Governing Council acknowledged the importance of the topic and recommended the inclusion of the project in the 2026-2028 Work Programme with high priority (Unidroit 2025 – C.D. (105) 32 – Report, para. 90). Following this recommendation, the General Assembly officially adopted the initiative as a high-priority project during its 85th session (Rome, 11 December 2025) (Unidroit 2025 – A.G (85) 3; Unidroit 2025 – A.G (85) 14, para. 81).

 

Working Group sessions and current status

Consistent with UNIDROIT’s established working methods, a Working Group has been established, composed of individuals selected for their expertise in the field of insurer insolvency, restructuring, and policyholder protection. Experts participate in a personal capacity and represent different legal systems and geographical regions.

In addition, several international and regional organisations, together with insurance supervisors, resolution authorities, and policyholder protection scheme bodies, have been invited to participate in the Working Group as institutional observers.

 

1st Working Group Meeting

The first session of the Working Group on Insurer Insolvency will take place at the seat of UNIDROIT in Rome and online from 30 November to 2 December 2026. The agenda and meeting documents will follow in due course.