Leon Walker, Europe, Middle East, and Asia (EMEA) Captives Leader for global re/insurance broker Aon, believes an established captives framework in the United Kingdom has the potential to provide businesses with greater flexibility in their use of captive solutions.
To recap, the Financial Conduct Authority and Prudential Regulation Authority have placed an open call for consultation to introduce a UK captive insurance regime.
The authorities have proposed a “tailored and competitive” regulatory framework to enable businesses to establish their own captive insurer.
Walker said, “These proposals are a significant milestone in establishing the UK as a competitive and credible captive domicile. Captives have now evolved well beyond a response to challenging insurance markets, they are increasingly recognised as strategic tools that help organisations manage risk efficiently, access reinsurance markets, optimise capital and build long-term resilience.”
He further explained that the greater flexibility available to businesses will be positive as it will allow them to select the structure and domicile that best supports their strategic objectives, while reinforcing the “UK’s position as a leading centre for insurance and risk innovation.”
The combination of the UK’s deep pool of expertise and talent across regions, and the unique strength of Lloyd’s and the London Market ecosystem, will propel the potential and opportunities that come with the introduction of a UK regime for both the sector and the clients, explained Walker.
He continued, “We also see this as a catalyst to attract more talented professionals into captive management roles, which increasingly sit at the intersection of risk, capital, and strategy. We are particularly pleased to see how the regulator has focused on proportionality and clarity.
“We look forward to engaging constructively throughout the consultation process, including seeking further clarity on areas such as business mix requirements and the treatment of clients with existing captives that are looking to redomicile to the UK alongside the UK’s separate corporate migration proposal.”
Aon is not the only broker welcoming these developments, as recently, Marsh, a risk advisory, insurance broking and reinsurance services firm, said that the framework could strengthen the UK’s position as a credible onshore home for captive risk financing.
