The UK has lagged behind many of its insurance market competitors in that it does not have a not have a tailored regime to allow the formation of captive insurers, which has led many corporations to establish their captives overseas, according to UK regulators, who hope to rectify that oversight with their plans to launch a captive insurance regime in July 2027.
Insurance brokers and trade associations have applauded the proposed rules for captives, rolled out yesterday, which have long been on the industry’s wish list to enhance the UK market’s competitive position. While France and Italy opened their doors to captives in 2023, other countries such as Ireland, Malta, Luxembourg, Sweden and Switzerland have long provided captive insurance options.
The UK government’s plan to facilitate captives was first announced in July 2025. Exactly a year later, on July 14, 2026, UK regulators — the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) — laid out their plans to create “internationally competitive UK captive insurance regime.” The regulators have requested an industry consultation that will close on Oct. 14, 2026.
“This bespoke regime for captives will enhance the UK’s competitive edge in insurance,” commented David Bailey, executive director for PRA, in a statement accompanying the announcement. “Ahead of the formal launch in 2027, we are keen to speak to any businesses that could benefit from establishing a UK-based captive.” (The full consultation document can be accessed here).
“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,” said Sarah Pritchard, deputy chief executive of the FCA.
Key features of the proposal include:
- A streamlined PRA/FCA authorization process with a target of 4-6 weeks;
- Excluding captives from Solvency UK and Consumer Duty requirements;
- Lower capital and reporting requirements;
- A flexible capital resources framework;
- Dedicated PRA supervisory resource;
- Specifically tailored FCA conduct requirements including proportionate supervision and reporting.
The proposed regime is currently for “single-parent” captives only, which would be used to insure or reinsure the risks of the parent company and other companies within its group.
Marsh Comments
Insurance broker Marsh welcomed continued progress towards a UK captive insurance regime, which it described as a “significant milestone for the UK insurance market and, if delivered in a competitive and proportionate way, could strengthen the UK’s position as a credible onshore home for captive risk financing.”
“Marsh is encouraged by the direction of travel set out in the consultation and the predicted outcomes,” the broker said in a press release. “In particular, the proposals point towards a workable model that would allow captives to combine direct insurance and reinsurance activity within a single legal entity, avoid blanket restrictions on ownership by particular sectors, and permit the use of fronting for compulsory classes where appropriate.”
“Over the next three months, we will work closely with government and regulators to help shape a framework that is proportionate, competitive and practical to implement, positioning the UK as a high-quality domicile for captives and delivering meaningful value for clients, and for the wider market,” commented James Addington Smith, CEO, Marsh Risk UK.