The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) have proposed a “tailored and competitive” regulatory framework to enable businesses to establish their own captive insurance companies in the UK.
The new proposals aim to establish the UK as the center of a fast-growing captive insurance market. The aim is to support the country’s economic growth, leverage its market expertise and solidify its position as the “preferred location” for global re/insurance.
For context, captive insurance enables a business to manage its own risks through a wholly owned insurance subsidiary.
The authority confirmed that the proposals are tailored to the specific nature of captive insurance and include key features such as a streamlined authorization process targeting 4-6 weeks.
In addition, the framework will exclude captives from UK solvency and consumer tax requirements and include lower capital and reporting requirements, as well as a flexible capital resources framework, dedicated PRA regulatory resources and specifically tailored FCA conduct requirements, including proportionality regulation and reporting.
The PRA and FCA confirmed that the framework includes appropriate safeguards, such as the ability of captives to reinsure, but not directly insure, employee benefit-related policies to protect individuals.
The consultation will end on 14 October 2026 and the system will launch in summer 2027, taking into account feedback from respondents.
David Bailey, executive director of prudential policy at the PRA, commented: “This bespoke captive system will enhance the UK’s competitive advantage in the insurance sector. We are keen to speak to any business that could benefit from the establishment of a UK captive ahead of its official launch in 2027.”
Sarah Pritchard, deputy chief executive of the FCA, said: “Competitive captive insurance options in the UK can benefit UK companies and support wider economic growth. Our approach is pragmatic and proportionate, with appropriate safeguards in place.”
