Leon Walker, head of Europe, Middle East and Asia (EMEA) captive insurance at global re/insurance brokerage Aon, believes that the captive insurance framework established in the UK has the potential to provide greater flexibility for companies to use captive insurance solutions.
To recall, the Financial Conduct Authority and Prudential Regulation Authority have issued a public consultation on the introduction of a UK captive insurance regime.
The authorities proposed a “tailor-made and competitive” regulatory framework that would enable businesses to set up their own captive insurance companies.
Walker said: “These proposals are an important milestone in establishing the UK as a competitive and credible location for captive insurance. Captive insurance has now evolved well beyond responding to a challenging insurance market, they are increasingly recognized as a strategic tool to help organizations manage risk effectively, access reinsurance markets, optimize capital and build long-term resilience.”
He further explained that the greater flexibility afforded to businesses would be positive as it would enable them to choose the structure and domicile that best supports their strategic objectives, whilst reinforcing “the UK’s position as a leading center for insurance and risk innovation”.
Walker explained that the UK’s deep expertise and talent pool across regions, as well as the unique strengths of Lloyd’s and the London market ecosystem, will drive the introduction of the UK system to deliver potential and opportunities for the industry and clients.
He continued: “We also see this as a catalyst to attract more talented professionals into captive management roles, which are increasingly at the intersection of risk, capital and strategy. We are particularly pleased to see how regulators are focusing on proportionality and clarity.
“We look forward to engaging constructively throughout the consultation process, including in areas such as further clarity on business portfolio requirements and the treatment of existing self-insured clients wishing to relocate to the UK on a separate UK business immigration proposal.”
Aon is not the only broker to welcome these developments, with risk advisory, insurance broking and reinsurance services company Marsh recently saying the framework could strengthen the UK’s position as a reliable onshore institution for captive risk financing.
