The UK is taking a significant step towards establishing a regulatory regime for captive insurance companies, following an announcement by the Chancellor of the Exchequer Rachel Reeves.
The announcement, made last night, revealed that HM Treasury will launch a consultation on the creation of a UK captive insurance regime.
If introduced, the regime could provide a vital risk management tool for UK and international businesses while bolstering London’s position as a global hub for insurance and risk transfer.
The move follows a concerted campaign by the London Market Group (LMG), which has been advocating for a proportionate regulatory framework for captives.
In recent months, the LMG has engaged with HM Treasury, the Prudential Regulation Authority, and the Financial Conduct Authority to shape the potential regime.
Caroline Wagstaff, CEO of the LMG, highlights the importance of the initiative for the UK’s competitiveness in the global market, stating: “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; captives are an increasingly important part of that mix.”
Wagstaff underscores the growing significance of the captive insurance industry, noting that global captive premiums are projected to reach US$161 billion by 2030.
“Other jurisdictions — including France and more recently Italy — are opening their doors,” Wagstaff adds.
She stresses the need for broad engagement during the consultation, highlighting: “It is vital that the Government hears directly from UK plc, captive owners, managers, brokers, and insurers — as well as businesses who may not have considered a captive before.”
Julia Graham, CEO of the UK Association of Insurance and Risk Managers in Industry and Commerce (AIRMIC), echoes the importance of captives in risk management strategies. “Captives are taking centre stage as part of the established and long-term risk financing strategies of many important commercial organisations,” Graham says.
She adds: “The London insurance market retains a leading global position with an envious world-class reputation. As part of this position, captives should play a mainstream role and in support of this, the UK should have a proportionate regulatory regime for captives.”
Industry experts suggest that a UK captive domicile could enable businesses to enhance resilience and manage risks domestically while leveraging London’s extensive financial services ecosystem. This includes access to London-based global brokers with captive consulting expertise, local banking and asset management options, and the world’s largest reinsurance market.
