The Prudential Regulation Authority (PRA) is working to build an internationally competitive captives regime in the UK, with a consultation paper expected by next summer. Shoib Khan, director of insurance supervision at the Bank of England, sets out the work in a speech at the Insurance Innovators Summit. The PRA is working closely with the government and industry to understand what they want to see in a UK regime. The target delivery date for the new regime is mid-2027. The vision for the UK captives regime includes a process that is responsive in terms of authorisation, proportionate capital and oversight requirements, and a framework that is flexible in responding to different business needs and classes of ceded risk. The push for a UK-based captives regime comes from corporates who told the PRA it would allow them to better incubate and manage new risks. Khan says that captives can allow for risk management advances and assist in fuelling product development, acting as risk incubators where emerging risk is housed to build a data track record before being ceded to the insurance market. In addition to the captives regime, the PRA continues its work to ensure the UK regime for Insurance Special Purpose Vehicles (ISPVs) is competitive. This includes implementing enhancements to streamline and simplify the approvals process, such as approving cat bond vehicles within 10 working days of a complete application. The PRA also intends to publish a discussion paper on identifying alternative capital options for UK life insurers later this month. Khan also notes the launch of the Matching Adjustment Investment Accelerator last month. This initiative allows life insurers to make timely investments in UK productive assets and gain favourable capital treatment based on their own assessment of eligibility, without needing to wait for PRA approval. All of these initiatives are designed to advance the PRA's Secondary Competitiveness and Growth Objective (SCGO) while maintaining safety and soundness and policyholder protection.
