The UK government has confirmed it will move forward with the creation of a regulatory regime for captive insurance companies, following a formal announcement by Chancellor of the Exchequer Rachel Reeves during her Mansion House speech on 15 July. The move marks the culmination of a multi-year campaign by the insurance industry, calling for a dedicated, proportionate framework to enable UK-based captives and strengthen London’s role as a global risk management hub. A public consultation launched in November 2024 received 42 responses, primarily from insurers, brokers, trade bodies and other market stakeholders. The upcoming regime is expected to provide UK corporates with new options for strategic risk retention and support the repatriation of captive business that might otherwise be domiciled offshore. It also positions the UK to compete more directly with other jurisdictions — such as France and Italy — that have recently introduced or expanded onshore captive regimes. Alongside the new framework, the government also announced plans to consult on the introduction of protected cell company structures. This would provide additional flexibility and access to captive solutions for mid-sized and smaller businesses, broadening market participation. The announcement has drawn strong support from across the industry, with several firms welcoming the move. Sean McGovern, chair of the London Market Group, says: “This announcement is clear evidence of the government recognising the London market’s role as a contributor to growth and delivering on commitments to support the industry as we continue to enhance the market’s world-leading position. “British companies and public sector institutions now need to join us in encouraging the regulators to move at pace to establish an attractive and dynamic UK captive regime so they grasp the opportunities offered by the announcement today with both hands.” Christopher Croft, CEO, LIIBA, notes: “LIIBA welcomes the Chancellor’s announcement that the government is going to progress the work to build a captives regime in UK. This will provide a valuable alternative for our members when seeking the optimal outcome for their clients’ risk management needs. “It should also consolidate London’s position as the risk management capital of the world by ensuring all necessary solutions are achievable here. But, as previous experience has shown, the regime will only deliver success if the technical framework is complemented by a culture within the regulators focused on making it work. We look forward to working with FCA and PRA to ensure this.” Stephen Cross, head of strategy and innovation at McGill and Partners, highlights: “This is an exciting and important step forward for the UK insurance market. With a strong captive insurance framework in place, the UK is in a prime position to potentially become the world’s leading insurance domicile for captives over the next decade. “It’s a smart move that will attract investment, create jobs and strengthen national resilience in our post-Brexit economy. As part of this new chapter, we are carefully reviewing the legislation to determine optimal strategies for organisations to benefit from this new captive insurance regime – and stand ready to support our clients.” The initiative is intended to be developed in close collaboration with financial regulators, with a clear timetable for delivery. It is also expected to align with broader government goals of attracting inward investment, promoting financial innovation, and creating high-value jobs across the UK’s insurance and risk services ecosystem.
