Industrial Policy in Disguise: The French Treasury and the Reregulation of the European Insurance Sector

Abstract In December 2023, the European Parliament and the Council reached an agreement to revise the Solvency II Directive, aiming to unlock €100 billion in private investment through a series of deregulatory measures. This marks a significant departure from the stringent insurance supervision framework that has shaped European policy since the financial crisis. Through detailed process tracing, this article examines the drivers behind this unexpected outcome and its broader implications for EU economic governance. Whilst this shift could be seen as part of the EU's growing prioritization of growth over stability, we argue that it is, above all, the result of France's sustained influence. Our findings suggest that the fragmented insurance industry played a limited role in the negotiations. Although the Commission actively promoted the Capital Markets Union and investment in the green transition, it largely acted as a reactive and pragmatic policy‐maker. Instead, we show that the reregulation of the European insurance sector was primarily driven by the sustained efforts of the French Treasury. However, rather than pushing for wholesale deregulation, French policy‐makers leveraged the Solvency II review to advance a cohesive asset‐led growth strategy at home – motivated by a desire for greater economic sovereignty through the inflow of liquidity into national companies. Taken together, these findings shed new light on EU financial regulation in the post‐Covid era, the evolving tension between the EU's interventionist shift and the rise of state activism and France's role in shaping European economic governance.