Industry bodies have responded to the UK government’s decision to move forward with a domestic regulatory framework for captive insurance, with both brokers and underwriters highlighting the potential benefits and challenges of the initiative.
The announcement, expected to be made by Chancellor of the Exchequer Rachel Reeves during her Mansion House speech today, signals a policy shift aimed at enabling the formation of captive insurers within the UK.
While the establishment of the framework marks a step towards expanding risk management options and attracting financial activity onshore, notable industry participants have stressed the need for practical implementation and regulatory alignment.
The London Market Group (LMG), which led a multi-year campaign for the regime, welcomed the development as a significant step toward reinforcing London’s position as a global hub for risk transfer and insurance.
The group’s campaign was supported by a coalition of brokers, captive owners, advisers and insurers. LMG also noted that discussions with HM Treasury, the Prudential Regulation Authority and the Financial Conduct Authority have been ongoing to shape the proposed framework.
“If London is to retain its position as a global centre for risk transfer, it needs to be able to offer all the tools in the toolkit,” LMG chair Sean McGovern (pictured above, left) said. “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.”
McGovern added that as other onshore jurisdictions such as France and Italy develop their own captive frameworks, it is essential for the UK to be part of this evolving global landscape to maintain its competitive position.
The global captive insurance market is projected to grow from approximately US$159 billion in 2024 to more than US$250 billion by 2032. Proponents of the framework argue that aligning domestic regulation with international best practice could enable the country to capture a share of that growth.
Christopher Croft (pictured above, right), chief executive of the London & International Insurance Brokers’ Association (LIIBA), said the development offers a valuable alternative for brokers supporting clients with bespoke risk management needs.
He added that the regime’s success will depend on more than just technical rules.
“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,” Croft said.
Croft also expressed LIIBA’s intention to work with the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) to support delivery.
“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,” he said.
International Underwriting Association (IUA) chief executive Chris Jones also issued a statement welcoming the move.
“There is a tremendous opportunity for the UK to become a leading domicile for captive insurance companies,” Jones said. “Both our world-class insurance talent pool and extensive financial ecosystem, in the London Market and nationwide, provide a strong foundation for this initiative.”
At present, much of the UK-related captive activity is based in jurisdictions such as Bermuda, Guernsey, and Luxembourg, where regulatory structures have been tailored specifically for captives. The UK’s existing regime, shaped by broader Solvency II requirements, has been cited by market participants as one reason companies have opted to domicile elsewhere.
Jones said a predictable regulatory regime would help build investor confidence, support inward investment, and contribute to job creation in specialised areas.
“In order to be successful, it must also be actively promoted, with responsive, cost-effective supervision that minimises market barriers to entry,” he said. “The prospect of a UK captives regime has already generated significant interest, and the IUA looks forward to working with the Government in its promotion.”
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