Insurance companies don't have to determine risk-free rates from swap rates when applying Solvency II: they just use the relevant column in the spreadsheet of risk-free rates provided by EIOPA each month (choosing the rates that are appropriate to their country / currency). If you are asking how EIOPA sets those risk-free rates, then it will use swap rates (or government bond yields, if there is no deep and liquid swap market) that are observable in that currency as the starting point, then will make a deduction for the inherent credit risk (even though this is relatively small, there will still be some). It will interpolate between points to fill in missing intermediate time periods, and for periods beyond the longest observable swap rate (or government bond yield) duration, it converges the risk-free rates to an 'ultimate forward rate' (set by EIOPA, updated from time to time).
Swap rates will reflect market forces (they are the rates at which both parties to the transaction will agree to perform the fixed / floating swap at), but fundamentally will be based on the market's expectation of future (short-term) interest rates, over the period for which the swap is arranged.
