Government consultation on new captive insurance regulations welcomed

The London Market Group (LMG) has welcomed the UK government’s plans to launch a consultation on creating a regulatory framework for captive insurance companies.

In the Autumn Statement yesterday (22 November 2023), Chancellor Jeremy Hunt said that discussions over such a regime would begin in Spring 2024.

And he revealed that a framework would be designed for “encouraging the establishment and growth” of captive businesses across the UK.

Such firms mainly write the risks of their parent firm or of entities that are part of the group.

Earlier this year (18 September 2023), LMG published a report, entitled A Plan For the Future, which said that the UK had no specific regulatory framework for captives, “instead treating them as insurance companies, even though they are very different entities”.

Following the news that a consultation will open next year in a bid to solve this, Caroline Wagstaff, chief executive of LMG, said in a LinkedIn post: “LMG is delighted that HM Treasury will consult on the creation of a UK captive regime by Spring next year, taking on board the recommendations within our Plan for the Future and all of our amazing working group.”

’Market growth’

When LMG’s report was launched, the organisation highlighted that the captive market was “growing rapidly”.

It claimed that captive premium was estimated to reach $161bn (£128.3bn) by 2030 and that countries such as France and Italy were opening their doors to the market.

And LMG felt that the creation of a UK captive framework would be a “key pillar” of its roadmap to improve the business environment for risk transfer in the UK.

Wagstaff added: “As the global centre for risk transfer, London needs to be able to offer all the tools in the toolkit, so this is a great step forward.

“We look forward to working closely with the government and regulators to ensure the UK remains a highly competitive insurance centre.”