UK insurers welcome 'tremendous opportunity' of captive framework

By Rebecca Delaney

July 15 - (The Insurer) - UK insurance industry representatives have welcomed the government's announcement that it will proceed with a captive insurance framework but stressed the need for proportionate, cost-effective supervision to compete with other European domiciles.

The UK government launched a consultation on a captive insurance framework in November 2024. The consultation response, published on Tuesday, said the government is "determined to proceed at pace".

UK financial regulators plan to consult on policy proposals in summer 2026, with a view to implementing the new framework in mid-2027.

The rules are expected to include proportionately lower capital and reporting requirements as well as faster authorisations for captive insurers.

The announcement was welcomed by UK insurance industry representatives, who have been vocal in their support for a captive framework to promote the sector's international competitiveness.

"This announcement is clear evidence of the government recognising the London market’s role as a contributor to growth and delivering on commitments to support the industry as we continue to enhance the market’s world-leading position," said Sean McGovern, chair of the London Market Group.

"British companies and public sector institutions now need to join us in encouraging the regulators to move at pace to establish an attractive and dynamic UK captive regime so they grasp the opportunities offered by the announcement today with both hands."

The consultation response said the majority of respondents sought to extend the regime beyond the scope of the original proposal to permit more types of firms to set up captives, as well as to allow more types of risks to be insured in captive vehicles.

As a result, the government published a consultation on Tuesday on potential reforms to its protected cell company framework following significant support for the inclusion of some form of captive insurance within the UK PCC regime.

"The announcement of the consultation on PCCs is very welcome as this offers real choice for UK companies of all sizes in the use of captives and genuine differentiation," said Caroline Wagstaff, CEO of the London Market Group.

"A clear timetable to delivery is also a real plus, it will help everyone to track progress and work at pace to deliver a world-beating regime."

Christopher Croft, CEO of the London & International Insurance Brokers' Association, said the trade body welcomed the latest update on the development of a UK captive regime.

"This will provide a valuable alternative for our members when seeking the optimal outcome for their clients’ risk management needs. It should also consolidate London’s position as the risk management capital of the world by ensuring all necessary solutions are achievable here," said Croft.

"But, as previous experience has shown, the regime will only deliver success if the technical framework is complemented by a culture within the regulators focused on making it work. We look forward to working with FCA and PRA to ensure this."

Chris Jones, CEO of the International Underwriting Association, hailed the announcement as a "tremendous opportunity" for the UK to become a leading domicile for captive insurance companies.

"Both our world-class insurance talent pool and extensive financial ecosystem, in the London market and nationwide, provide a strong foundation for this initiative," said Jones.

“A clear and predictable regulatory regime will enhance investor trust, encourage inward investment and help create more high-paying specialised jobs. In order to be successful, it must also be actively promoted, with responsive, cost-effective supervision that minimises market barriers to entry."