The Prudential Regulation Authority has signalled that a consultation paper on a new UK captive insurance regime is imminent, with the framework expected to go live in mid-2027, following a speech by Shoib Khan (pictured), the PRA's director of insurance supervision, at the Airmic Annual Conference in Birmingham.
Khan outlined the regulator's thinking on capital requirements, governance, authorisation and supervisory approach, while making clear that the PRA is prepared to move quickly once the consultation is published.
The PRA confirmed the development of a UK captive regime as a formal supervisory priority for 2026, framing the work within its broader objectives around competitiveness, innovation and growth. The regime has been in development since at least September 2023, when the PRA attended an initial roundtable hosted by the City Minister, and in 2025 the regulator gained the powers to amend its rulebook to create a bespoke framework.
The commercial case is not in dispute. An estimated 500 UK-associated captives are currently domiciled offshore in jurisdictions including Guernsey, the Isle of Man and Bermuda, with regulatory constraints under Solvency II widely cited as a driver of that outflow.
The London Market Group has projected that a domestic regime could attract roughly £100 million in new annual premium and create around 1,000 jobs, and has identified more than 300 UK-headquartered firms with offshore captives that could potentially be brought onshore.
Khan indicated that several clear design principles have emerged from Subject Expert Groups held in collaboration with the FCA. On capital, the groups discussed moving away from Solvency II-based minimum capital requirements towards a simpler, factor-based approach, alongside consideration of how contingent capital should be treated to avoid it being seen as trapped within the captive structure. On reporting, proportionate requirements calibrated to the complexity and scale of each captive were explored. Transparent authorisation processes, defined fees and service standards, and a team with a mandate to move quickly were also flagged as essential to commercial credibility.
One feature of the original ambition will be absent at launch. Protected cell companies will not form part of the initial framework, as the legislative changes needed to allow them to function as captive insurers will not be finalised in time. HM Treasury has committed to introducing the necessary primary legislation when parliamentary time allows, and the PRA intends to consult on incorporating them once that is in place.
The speech was broadly welcomed as a meaningful step forward, shifting emphasis from policy design towards delivery.
Cormac Bradley, senior actuarial director at financial consultancy Broadstone, said: "The speech doesn't fundamentally change the architecture of the proposed UK captive regime, but it does something important — it provides much greater confidence in how the PRA intends to deliver it in practice and the type of regime it is seeking to build. The emphasis on simplicity, proportionality and flexibility, particularly around capital, sends a clear signal that the UK is aiming to build a regime that is commercially viable and genuinely competitive, rather than a light-touch version of Solvency II."
Bradley said the key takeaway for UK and international groups is that the regime is moving from concept towards an actionable framework, and that firms beginning to assess how a captive could support their wider risk management strategy would be best placed to shape and benefit from it.
"The success of the regime will depend on whether the PRA can translate this clearer, more commercially focused tone into a practical and competitive supervisory framework capable of attracting both UK and international captive formations," he added.
That market appetite is already beginning to show. Aon has confirmed it will launch a new UK-based captive management company once regulations are in place. Ciaran Healy, global captives leader at Aon, described the UK as a natural contender for a competitive captive domicile given its strong insurance infrastructure and appetite for innovation, a view shared by Airmic, the UK risk management association, which spent more than two years lobbying for a bespoke regime before the government committed to one in July 2025.
Khan acknowledged that the PRA is a newcomer in a market where established domiciles have decades of track record, and that the regulator's philosophy on supervision will matter as much as the rules themselves.
The consultation paper is expected shortly, with the PRA urging Airmic members to engage actively when it is published.
