EU Insurers Propose Solvency II Rule Changes to Unlock Venture Capital Investment

European insurers have formally proposed amendments to Solvency II rules aimed at freeing up capital for venture capital investment, according to a Law360 report. The industry push targets the calibration of capital charges that currently make VC allocations prohibitively expensive for regulated insurers. The proposals represent a distinct regulatory-reform angle from the broader EU competitiveness debate: rather than lobbying Brussels on macroeconomic agenda-setting, insurers are targeting the granular prudential capital framework that governs how they must hold reserves against equity risk. Under Solvency II's standard formula, unlisted equity — including VC — attracts a stress charge of 49%, making such investments capital-intensive relative to listed assets. Industry bodies argue that recalibrating this charge, or expanding the qualifying criteria for the lower-charge long-term equity sub-class, would materially shift insurer appetite toward growth-stage private companies. The timing is deliberate: the EU's Capital Markets Union agenda explicitly identifies institutional investors as a critical source of scale-up financing for European tech firms. Whether the European Commission incorporates any recalibration into the next Solvency II delegated act revision remains to be seen.