Zurich Insurance supports the creation of a regulatory framework for captive insurance in the UK, as the consultation window closes on 14 October. The insurer is submitting a formal response to the consultations run by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), backing what it describes as efforts to establish a proportionate and competitive regime. Zurich states that it has more than 35 years of experience in captives and manages more than 600 fronting programmes globally. Esme Gould, head of captives and alternative risk transfer at Zurich UK, says: "At Zurich, captives are a core part of our proposition for commercial clients. They’re a useful and effective way of helping complex businesses manage their risks and establishing a regime here has the potential to strengthen the UK’s position as a leading global insurance centre." Gould says: "The PRA and FCA have taken a highly collaborative approach to the consultation period and the process has generated significant industry interest. It’s provided valuable opportunities to discuss how a tailored framework can encourage innovation, support corporate risk management and, over time, potentially attract additional insurance activity to the UK." On the shape of the proposals, Gould says: "The proposed regime recognises the distinct nature of captive insurers and introduces a proportionate approach that should be competitive with existing regimes. We look forward to working with clients as the framework develops, and to supporting the next steps of enabling protected cell company structures as well." The PRA consultation paper CP11/26, A tailored regime for captive insurance, and the FCA consultation paper CP26/29 both close on 14 October. The proposals set a captive capital requirement at the higher of 10 per cent of net written premiums or 10 per cent of net insurance liabilities, with a floor of GBP100,000 in paid-in tier one capital, and a target of four to six weeks for authorisation of complete applications. Compulsory classes and employee benefits would be permitted on a reinsurance basis only, and a 10 per cent volume cap would apply to material non-group business. Minutes of the PRA captives industry roundtable held on 17 September record that HM Treasury gave an update on the legislative work required to enable protected cell companies to undertake insurance activity, that timing would depend on the legislative process and that further regulatory consultation and policy development would be required. The minutes also record HM Treasury stating that the Government is not anticipating providing tax incentives for captives under the current proposals, and that captives would be taxed in the same manner as other insurance undertakings.
