Solvency II 2026: what changes for insurers with the new list of sub-national entities

Key data

European insurers with exposure to debt from regional administrations or local authorities have less than a month to review their solvency models. The Implementing Regulation (EU) 2026/911, published on 28 April 2026, amends the technical standards of Regulation 2015/2011 and updates the lists of sub-national entities that count as risk equivalent to a central government in the calculation of solvency capital requirement (SCR).

This is not a cosmetic change. If a regional administration enters or exits that list, the capital treatment of the debt it issues changes, and with it the SCR that the insurer must maintain. The impact is direct on the company's solvency position.

What does this regulation establish?

The Solvency II framework allows certain regional administrations and local authorities to receive, for the purposes of SCR calculation, treatment equivalent to central governments. This means that debt issued by those sub-national entities consumes less regulatory capital than debt from other entities with lower credit ratings.

Implementing Regulation 2015/2011 established the original lists of entities that met that condition. The new Regulation 2026/911 updates those lists, reflecting changes in the situation of regional and local administrations in EU Member States.

Insurers must apply the new lists in their SCR calculation models from the date of entry into force: 17 May 2026.

Economic and operational impact

The specific impact on each insurer depends on its investment portfolio and, specifically, its exposure to debt issued by regional and local administrations in the EU. There are two possible scenarios:

• A sub-national entity enters the updated list: the debt it issues begins to receive central government treatment. The SCR associated with that exposure is reduced. The insurer releases regulatory capital.
• A sub-national entity exits the updated list: the debt it issues no longer receives preferential treatment. The associated SCR increases. The insurer needs more capital to maintain the same level of solvency.

The operational impact directly affects the risk management and compliance departments, which must update calculation models, review the investment portfolio and, if necessary, adjust the capital position before 17 May 2026.

Who does it affect?

• Insurance companies operating in the European Union with exposure to debt from regional or local administrations.
• Reinsurance companies with investment portfolios that include EU sub-national debt.
• Risk management departments responsible for SCR calculation and reporting.
• Compliance departments responsible for adapting to changes in Solvency II.
• CFOs and financial directors of insurers with positions in European regional or local debt.
• Actuaries and internal model managers who must update SCR calculation parameters.

Practical example

A Spanish insurer holds bonds issued by an autonomous community that, until now, was listed in the Regulation 2015/2011 lists as an entity equivalent to a central government. Thanks to that status, the regulatory capital it had to maintain against that exposure was minimal.

If Regulation 2026/911 removes that autonomous community from the updated list, the insurer loses the preferential treatment. The SCR associated with that position increases, forcing the company to:

1. Recalculate the total SCR of the portfolio with the new parameters.
2. Determine whether the level of eligible own funds continues to cover the new SCR.
3. Decide whether to adjust the portfolio (reducing exposure to that debt) or strengthen capital.

All of this must be resolved before 17 May 2026, the date Regulation 2026/911 enters into force.

What should companies do now?

1. Identify exposure to sub-national debt: review the investment portfolio and locate all positions in debt issued by regional administrations and local authorities in the EU.
2. Compare old and new lists: contrast the lists from Regulation 2015/2011 with those from Regulation 2026/911 to identify which entities have entered or exited.
3. Recalculate the SCR: update the solvency capital requirement calculation models with the new parameters derived from the updated lists.
4. Evaluate the impact on the solvency position: determine whether the solvency ratio is affected and to what extent.
5. Make portfolio or capital decisions if necessary: if the SCR increases and the capital position is insufficient, decide between adjusting the portfolio or strengthening eligible own funds.
6. Document the process: keep a record of the analysis performed and decisions made for the compliance file.
7. Deadline: the entire process must be completed before 17 May 2026.