’Looking ahead, we want our commitment to innovation and competitiveness to be increasingly clear,’ says director
The UK insurance industry has been told it is now time to “light the blue touchpaper” and drive greater innovations.
The call was made by Shoib Khan, director of insurance supervision at the Bank of England (BoE), who said the regulators were keen to make the changes needed to support insurers.
Speaking at the 25th Insurance Innovators Summit in London, he told delegates that much was being done by the Prudential Regulation Authority (PRA) and FCA to support the efforts to enable better innovation and reduce the regulatory burden.
“The PRA is keen to take a responsible approach to risk operations and innovation,” Khan added.
“To achieve this, we are working a broad range of initiatives to support innovation.
“However, we must ensure that the PRA adheres to our primary objective of ensuring safety, soundness and customer protection.
“Our second objective is to encourage and enable growth and we are committed to creating the regulatory space and the regulatory freedom that will allow insurers to be confident they can innovate.”
He added that the London market ”has a history and reputation for innovation”, as demonstrated by Lloyd’s Lab.
Lloyd’s Lab is an innovation hub and accelerator programme that connects startups with the insurance industry.
It offers mentoring, collaboration and funding opportunities.
Khan said: ”As we have seen in the establishment of the Lloyd’s Lab, there has been 150 transformative solutions incubated in the lab with a significant amount of capital invested to establish those new and exciting projects.
“The London market has also established a global cyber insurance offering, which is now worth £1bn in premiums. It is an example of how the market can innovate and create products which meet the changing needs of the customer.”
Captive insurance market
Khan added that progress was continuing in the BoE’s work to establish a UK captive market.
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A captive is a wholly-owned subsidiary insurer formed to provide risk mitigation services for its parent company or related entities.
A consultation for a new framework around captives was unveiled by chancellor Rachel Reeves in her speech at Mansion House on 14 November 2024.
The government announced in July 2025 that “following careful consideration of the consultation responses, the government, working closely with the financial regulators, intends to proceed with the introduction of a new UK captive insurance framework”.
Khan said: “We are aware that corporate risk management function is keen to see how they can better manage their risks and the captive market allows them to assume risks and also drive innovation.
“We are working with our partners, including insurers, to establish what the captive market would look like.
“The aim is to create a captive market which will be internationally competitive and have the right level of regulation.
“The timetable is that the PRA will issue its consultation and comments next summer, with the plan to establish the market mid-2027.”
Conclusion
Concluding his speech, Khan said that the BoE ”very much” sees its role as being ”supporters of innovation in the insurance sector”, especially given its work on UK insurance special purpose vehicles (ISPVs).
The PRA and FCA have joint responsibility for the authorisation of UK ISPVs.
“The investment accelerator is already live and once our work on ISPVs is complete, we’ll have added more optionality to the UK regulatory regime,” Khan said.
”From innovation in the Lloyd’s Lab and London Bridge 2, the market is providing new products and solutions.
“The UK is becoming a more competitive jurisdiction for insurance-linked investment, thanks to our reforms aimed at making these vehicles more accessible, transparent and resilient.
”And a captives regime will offer corporates in the real economy the opportunity to retain and manage new risk in an efficient manner that allows for innovation.
“Looking ahead, we want our commitment to innovation and competitiveness to be increasingly clear – not just in what we say, but in what we do. Of course, balance is key and where innovation poses a risk to our objectives we will scrutinise that closely.
”But, based on all the examples I’ve given today, we feel we’re doing our bit. The next step is for you – the market – to light the blue touch paper of innovation.”
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