The Prudential Regulation Authority (PRA) has voiced support for HM Treasury's (HMT) plans to advance legislative reforms to the UK's risk transformation regime, a move that will affect insurance special purpose vehicles (ISPVs).
This development is expected to open the door to the use of Protected Cell Company (PCC) captives as part of a broader push to position Britain as a competitive captive insurance hub.
The regulator confirmed it has worked alongside HMT in shaping the proposals, which form part of a wider effort to modernise the country's insurance framework.
A consultation on a new captives regime is scheduled for Summer 2026, with the framework expected to launch in Summer 2027. The regime is designed to position the UK as a hub for wholesale insurance services and to broaden access to the risk management advantages associated with captive insurance.
Previously reported figures from a Global Insurance Law Connect report found that more than 7,000 captives are now active worldwide, collectively writing in excess of US$80 billion in premiums.
In the same report, London Market Group (LMG) chief executive Caroline Wagstaff said a domestic regime would allow the UK to "retain and attract corporate capital that might otherwise move offshore," with global reinsurance capital having climbed back above US$700 billion.
The competitive backdrop is stark. Research from consultancy Milliman shows Bermuda, the Cayman Islands and Vermont leading global captive domiciles by number, with Guernsey the largest in Europe.
Industry estimates cited by Captives Insure suggest the UK is home to fewer than 10 captives, with most British corporate captives domiciled in Guernsey, the Isle of Man or Bermuda.
UK public-sector bodies, including Transport for London, Network Rail and the Nuclear Decommissioning Authority, are among those holding offshore captives, according to evidence submitted to a UK parliamentary committee.
Read more: UK moves closer to captive insurance regime
The LMG has projected that a domestic regime could attract roughly £100 million in new annual premium and create around 1,000 jobs, while identifying more than 300 UK-headquartered firms with offshore captives that could be brought onshore.
The legislative changes needed to allow PCCs to function as insurers will not be finalised in time for the consultation. As a result, PCCs will be excluded when the regime launches.
The PRA indicated that it will continue its work with HMT and plans to consult on adding PCCs once the relevant legislation has been passed, extending the framework's reach to a wider range of market participants.
On the ISPV side, the regulator pointed to reforms introduced in 2025 that strengthened the existing framework, including an accelerated authorisation pathway. Further ISPV-focused reforms are also under consideration, aimed at adding simplicity, flexibility and access, as well as improving the use of PCCs within ISPV structures.
The PRA has not yet published the full consultation paper but signalled that further detail will follow in the coming months.
