The UK government has vowed to take the necessary steps to attract insurance-linked securities (ILS) business, such as catastrophe bonds, into the country.
As part of the 2015 Budget, chancellor of the exchequer George Osborne has said that the government would work with the industry and regulators to develop competitive corporate and tax structures to allow ILS to be domiciled in the UK.
Osborne also raised the government’s intentions to back financial technology and pursue the possibility of conducting global reinsurance.
Colin Graham, UK insurance tax leader at PwC, commented: "The announcement today of a commitment to develop an Insurance Linked Security (ILS) regime in the UK is a boost for the insurance sector and should stimulate growth.”
“This is good news and a direct response to engagement with the industry in the last few months on global competitiveness from a regulatory and tax perspective.”
Despite being a “boost” for the insurance sector, Graham also aired his disappointment at not hearing any feedback on the broader competitiveness review that was announced in the Autumn Statement.
He continued: “The ILS announcement is very positive, but arguably does not go far enough. We also wait to see the detail of the Diverted Profits Tax that takes effect on 1 April to see whether government has listened to the industry's concerns in relation to its scope and associated concerns over complexity and global competitiveness."
