Marsh, a risk advisory, insurance broking and reinsurance services firm, has welcomed the recently announced Financial Conduct Authority and Prudential Regulation Authority’s consultation for the introduction of a UK captive insurance regime.
The broker, in a statement, said, “The consultation is 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 emphasises that the regulators’ consultation and push for engagement over the coming months will add sustained, clear momentum to build a regime that works practically.
The broker claims that a well-designed UK captive framework can help organisations manage risk more effectively, support investment and innovation, and increase resilience amidst volatility, emerging risks, and capacity constraints.
Marsh remains optimistic about the steps set out in the consultation and the predicted outcomes. 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.
The broker said, “The consultation also indicates that Protected Cell Companies remain part of the longer-term ambition, alongside a simpler and more proportionate approach to capital and solvency that recognises the specific risk profile of many captive structures. Continued efforts to accommodate joint ventures and owner-controlled arrangements are also positive, as these models can be important for groups exploring shared or collaborative approaches to risk financing.”
However, Marsh places a huge emphasis on clarity and expects additional refinement will be needed. Especially around the scope of international employee benefits arrangements, the practicalities of some regulatory frameworks, and the ownership thresholds required to qualify for certain structures, particularly for joint ventures.
On redomiciliation, Marsh notes that while a credible pathway for overseas captives to move to the UK could enhance the country’s attractiveness, the current position is not fully clear on the implementation details and that new entrants may need to plan for incorporation and licensing steps in the near term.
James Addington Smith, Chief Executive Officer, Marsh Risk UK, commented, “We welcome the continued progress towards a UK captive insurance regime. 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.”
