Captive regime in focus as UK industry awaits Reeves’ Mansion House speech

By Ryan Hewlett

July 14 - The Insurer) – British finance minister Rachel Reeves is expected to pledge a bonfire of financial services regulation in a major speech on Tuesday, but the London insurance market is hopeful of news on plans to deliver a captive insurance market in the UK.

The Chancellor is set to axe red tape and announce the launch the inaugural financial services growth and competitiveness strategy in her annual Mansion House speech to City executives in London on Tuesday, where she will speak alongside Bank of England Governor Andrew Bailey.

Growth and competitiveness was introduced as a secondary objective for UK financial watchdogs in August 2023 under the Financial Services and Markets Act, in a move warmly welcomed by the London (re)insurance market.

Reeves is also expected to outline phase two of the pensions review and update on the development of a captive insurance framework, the latter being of particular interest to the sector which has long called for a competitive onshore captive regime in the UK.

“We are absolutely focused on the government announcing the implementation of a captives regime for the UK. We have campaigned on this issue for some years because we believe it offers a significant growth opportunity for London insurance markets,” said Caroline Wagstaff, CEO of the London Market Group in a statement to The Insurer.

The LMG has helped spearheaded calls for a proportionate captive insurance regime. The UK government launched a consultation for a UK captive insurance framework in November 2024, while the post-consultation 12-week window closed in early May and a response has not yet been issued.

Wagstaff said she is hoping that the Chancellor will announce a green light on a captives regime but also that Reeves will say the government is likely to move at speed to build a “genuinely competitive” captive regime.

“This will allow the UK to build a global market share in this growing insurance segment at pace, without losing out to competitors,” Wagstaff said.

Wagstaff continued: "The government has acknowledged (re)insurance as a key growth sector and it is our hope that they will set out, both in the Chancellor's speech and the Financial Services Strategy itself, the precise steps government will take to support the market in order to help secure the London's position as a genuine world leader in commercial (re)insurance.”

The London & International Insurance Brokers Association is also seeking news on the proposed regime, with CEO Christiopher Croft noting that London needs to have “all possible solutions available” if its is to remain the preeminent destination for global risk.

“We also hope for more detail on the review of the Senior Management regime that was trailed in the Chancellor’s last Mansion House speech. This remains an impediment to attracting the best international talent to London," Croft said.

"The insurance sector has long called for a regulatory environment that not only supports but works in partnership with the industry to help the UK retain its position as the pre-eminent global hub for risk management,” Croft said. “It is hoped that what the speech delivers is a renewed commitment to delivering a regulatory regime focused on supporting international competitiveness and growth, helping to attract more, profitable business to London."

Arabella Ramage, legal and regulatory director, Lloyd’s Market Association said it is important that the government is clear that it continues to support competitiveness and a move away from “a zero-failure mindset” from the regulators.

“We need the signal that non-consumer business can be viewed differently to allow innovation and development,” said Ramage. “We also need the government to protect access to foreign markets – continuing to improve relations with the EU, and supporting distribution in the U.S.”

Ramage also called for greater collaboration, noting that there may be opportunities to work with government in areas such as cyber and natural catastrophe where many jurisdictions are competing for limited capacity.

Earlier on Monday, British brokers called on Reeves to tear up “over-burdensome” regulation, warning urgent action is needed to a halt a “downward spiral” in productivity.

The British Insurance Brokers' Association made the plea in a letter to Reeves ahead of her speech. The letter, signed by BIBA chief executive Graeme Trudgill, called on urged the government to work with regulators to create a more proportionate framework with quick responses and streamlined reporting – conditions which welcome startups and encourage them to become scale-ups.

It followed the publication of a survey from KPMG on Monday found that more than 80% of financial services leaders are confident that the UK government's financial services growth and competitiveness strategy will boost growth and attract foreign investment to the UK.