Speech of Reeves on Detainees Met with Approval by LMG
The UK government has unveiled plans for a new captive insurance regime, aiming to make the country a more attractive destination for captive insurers. This move is part of the broader "Leeds Reforms" financial regulatory package, designed to revive and grow the captive insurance and insurance-linked securities (ILS) sectors in the UK.
The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) will develop specific rules for the new regime, with implementation expected around mid-2027, following consultations in 2026. The proposed regime promises greater flexibility, simplified compliance, reduced capital requirements, and streamlined reporting, which should better harness the potential of the UK's unrivaled insurance infrastructure.
Sean McGovern, Chair of the London Market Group (LMG), hailed the announcement as evidence of the government recognizing the London Market's role as a contributor to growth. The LMG has been advocating for a more tailored and proportionate approach to regulation for the UK's financial services sector for several years.
The new regime is expected to deliver a risk management tool for UK and international plcs, supporting the UK’s standing as a leading international jurisdiction for insurance and risk management business. It will provide UK businesses with greater risk management options through captive insurers, creating additional jobs and insurance market-related activity in the UK economy.
Moreover, the regime will offer an important risk management tool for UK and international public limited companies, reinforcing London’s position as the global centre for risk transfer and insurance. The London-based global brokers, extensive local banking and asset management options, and the world's largest and most sophisticated reinsurance market will all benefit from the UK captive domicile.
Martina Neary, EY UK Insurance Leader, commented that the new UK captive insurance regulatory regime has the potential to drive opportunities for multinational and domestically focused groups. Caroline Wagstaff, CEO of the London Market Group, expressed support for a more tailored and proportionate approach to regulation to enable the UK's financial services sector to compete on the global stage.
The LMG organized a roundtable with experts from the global risk transfer value chain to discuss the potential benefits of introducing a UK captive insurance regime. The roundtable, initiated by City Minister Andrew Griffith and the London Market Group, was held to consider its potential benefits.
The LMG recently announced the publication of two documents focused on safeguarding the London Market's leading position in the years to come, highlighting five concrete changes required from Government and regulators. These documents outline the changes needed to maintain the London Market's leading position in the global insurance and risk transfer markets.
Captives are a rapidly growing global industry, with captive premium estimated to reach US$161 billion by 2030. The UK's new captive insurance regime, by offering proportionately lower capital requirements, reduced application and administration fees, faster authorization processes, and lighter ongoing reporting compared to traditional insurers and reinsurers, is expected to stimulate market activity in London and enhance its competitiveness in global insurance and risk transfer markets.
In summary, the proposed UK captive regime balances regulatory oversight with tailored lighter regulation appropriate for captive insurers’ risk profiles, aiming to boost the London insurance market and enhance its competitiveness in global insurance and risk transfer markets.
- The development of specific rules for the new captive insurance regime under the Leeds Reforms will include provisions for simplified compliance for captive insurers, aiming to reduce their capital requirements.
- The UK's new captive insurance regime, offering proportionately lower capital requirements, reduced application and administration fees, and lighter ongoing reporting, is expected to attract more reinsurance businesses and drive opportunities for multinational groups.
- The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) are anticipated to develop regulations for captive insurers that will offer greater flexibility and streamlined reporting, providing significant benefits for UK and international public limited companies.
