UK Regulators Propose Tailored Captive Insurance Regime to Boost Competitiveness

The Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) have proposed a new regulatory framework for captive insurance in the UK, aiming to establish the country as a hub for the growing captive market. Captive insurance allows businesses to manage risks through wholly owned subsidiaries. The consultation, announced in July 2026, outlines a streamlined authorization process with a target of 4-6 weeks, exemptions from Solvency UK and Consumer Duty requirements, lower capital and reporting demands, a flexible capital resources framework, dedicated PRA supervisory resources, and tailored FCA conduct rules. Safeguards include a ban on captives directly insuring employee benefits policies, though reinsurance is permitted. David Bailey, PRA Executive Director for Prudential Policy, stated the bespoke regime will enhance the UK's competitive edge, with formal launch expected in 2027. Sarah Pritchard, FCA Deputy Chief Executive, emphasized a pragmatic approach supporting economic growth. The consultation closes on 14 October 2026, with the regime launching in summer 2027. Initially, the framework applies only to single-parent captives; protected cell companies will be addressed later pending legislation. The proposal leverages UK market expertise and aims to cement its position as a global insurance and reinsurance location.