The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) launch their consultation on a bespoke regulatory regime for captive insurance, setting out the detailed framework for a regime the regulators have been trailing since 2025. The consultation, published in PRA consultation paper CP11/26, proposes a streamlined PRA and FCA authorisation process with a target of four to six weeks. Captives would be excluded from Solvency UK and Consumer Duty requirements, and subject to lower capital and reporting requirements, a flexible capital resources framework, dedicated PRA supervisory resource, and specifically tailored FCA conduct requirements including proportionate supervision and reporting. Under the proposals, a captive would hold a captive capital requirement (CCR) set at the higher of 10 per cent of net insurance liabilities or 10 per cent of net premiums, subject to a minimum of £100,000. The £100,000 floor must be met by paid-in capital only, with letters of credit and parental or group support agreements acceptable to meet the remaining CCR, subject to relevant criteria. Intercompany loan-backs are permitted, and assets and liabilities are generally recognised and valued in line with statutory accounting. Reporting is limited to annual quantitative templates based on statutory reporting. On governance, the proposals require a captive board to have a senior management function holder and a mandatory non-executive director. Captives would assess the need for an independent non-executive director based on the nature, scale and complexity of their risks. The framework includes safeguards. To protect individuals, captives would be able to reinsure, but not insure directly, employee benefits-related policies. The regime is initially for single-parent captives only, which insure or reinsure the risks of the parent company and other companies within its group. Protected cell companies (PCCs) do not form part of the regime at launch, because the legislative changes required to enable them to operate as insurers will not be in place in time. The PRA intends to consult on incorporating PCCs once the necessary legislation is enacted. David Bailey, executive director for prudential policy at the PRA, says: “This bespoke regime for captives will enhance the UK’s competitive edge in insurance. Ahead of the formal launch in 2027, we are keen to speak to any businesses that could benefit from establishing a UK-based captive.” Sarah Pritchard, deputy chief executive of the FCA, says: “A competitive captive insurance option in the UK could benefit UK companies and support wider economic growth. Our approach is pragmatic and proportionate, with appropriate safeguards in place.” The consultation closes on 14 October 2026, with the regime due to launch in summer 2027 after respondent feedback is considered. The launch follows a wider government programme to position the UK as a competitive onshore alternative to established captive domiciles such as Guernsey, Bermuda and the US state of Vermont. HM Treasury launched its original captive insurance consultation in November 2024 and published its response in July 2025, alongside the Chancellor’s Mansion House speech. The PRA confirmed in April 2026 that it would consult in summer 2026, and Shoib Khan, director of insurance supervision at the PRA, set out the approach in a speech to the Airmic annual conference in June 2026.
