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 insurer in the United Kingdom.
These new proposals aim to establish the UK as a centre for the fast-growing captive insurance market. The goal is to support the country’s economic growth, leverage its market expertise, and cement its position as “the location of choice” for global re/insurance.
For context, captive insurance enables businesses to manage their own risks through a wholly owned insurance subsidiary.
The authorities confirm that the proposals are tailored and proportionate to the specific nature of captive insurance, and include key features such as a streamlined authorisation process with a target of 4-6 weeks.
Additionally, the framework would exclude captives from Solvency UK and Consumer Duty requirements, and include lower capital and reporting requirements, as well as a flexible capital resources framework, dedicated PRA supervisory resource, and specifically tailored FCA conduct requirements including proportionate supervision and reporting.
The PRA and FCA confirm that the framework includes appropriate safeguards, such as captives being able to reinsure, but not insure directly, employee benefits-related policies, in order to protect individuals.
The consultation will close on October 14th, 2026, and the regime will launch in summer 2027, after considering respondent feedback.
David Bailey, Executive Director, Prudential Policy, PRA, commented, “This bespoke regime for captives will enhance the UK’s competitive edge in insurance. Ahead of the formal launch in 2027, we are keen to speak to any businesses that could benefit from establishing a UK-based captive.”
Sarah Pritchard, Deputy Chief Executive, FCA, said, “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.”
