The UK is moving closer to introducing a dedicated regulatory regime for captive insurers, a shift that could widen risk management options for businesses and make captive structures more accessible to a broader range of companies, according to Artex.
In a briefing, Artex said the proposed framework marks a significant step for the UK insurance market, particularly for businesses seeking more flexible ways to retain and finance difficult or expensive risks.
Confirmed in July 2025 by Treasury, the government said it would proceed with a UK regulatory framework for captives, a decision welcomed by both the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). The regulators have since indicated that a further consultation is expected in summer 2026, with the aim of creating a proportionate authorisation and regulatory regime that reflects the lower risk profile of captives.
Artex said the development could be especially important because, although London and Lloyd’s remain leading global re/insurance markets, some UK businesses still struggle to secure cover at a suitable level and price. Historically, those wanting captive solutions have often had to look offshore because the UK lacked specific rules for licensing and establishing captive insurers.
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Further, a domestic regime is said to offer several advantages. A UK-domiciled captive would place the subsidiary in the same jurisdiction as the parent company, potentially reducing travel, administrative complexity, and tax and accounting complications. It could also make it easier to share finance and other corporate functions, access UK-based service providers and reinsurance capacity, and operate under a single regulatory environment. Artex also pointed to the UK’s ability, post-Brexit, to design a more proportionate solvency framework outside the European Union’s Solvency II regime.
For businesses, captives can provide more stable insurance costs, tailored policy wordings, and cover for risks that may be too expensive or unavailable in the commercial market. Artex said they can also improve capital efficiency, support balance sheet protection, and strengthen risk management culture across an organisation.
Looking ahead, Artex shared the PRA plans to publish a consultation paper in June and is encouraging businesses to engage early so the eventual framework is proportionate and fit for purpose. The firm said organisations already operating captives, or considering one, may want to begin discussions now on feasibility and domicile options, including the UK.
