Chancellor Rachel Reeves officially announced plans for a new UK captive insurance regime during her Mansion House speech last night, in a major policy shift intended to help the UK compete with established captive domiciles.

The new regime is expected to introduce a light-touch regulatory framework, supporting the formation of captive insurers onshore, and encouraging existing captives to relocate to the UK.

This week's announcement follows a campaign led by the London Market Group and supported by brokers, captive owners and advisers, and insurers.

Chair of the LMG, Sean McGovern, said the announcement is "clear evidence of the government recognising the London Market’s role as a contributor to growth".

"British companies and public sector institutions now need to join us in encouraging the regulators to move at pace to establish an attractive and dynamic UK captive regime so they grasp the opportunities offered by the announcement today with both hands," he commented. “Captives are taking centre stage as part of the established and long-term risk financing strategies of many important commercial organisations. It is a rapidly growing global industry, with captive premium estimated to reach US$161 billion by 2030, and other onshore jurisdictions – including France and more recently Italy, are opening their doors."

Caroline Wagstaff, CEO of the LMG added: “The announcement of the consultation on protected cell companies is very welcome as this offers real choice for UK companies of all sizes in the use of captives and genuine differentiation. A clear timetable to delivery is also a real plus, it will help everyone to track progress and work at pace to deliver a world-beating regime."

Welcoming the development, International Underwriting Association chief executive Chris Jones said the prospect of a UK captive regime has already generated significant interest.

“There is a tremendous opportunity for the UK to become a leading domicile for captive insurance companies,” he said. “Both our world-class insurance talent pool and extensive financial ecosystem, in the London Market and nationwide, provide a strong foundation for this initiative.”

Jones stressed that a clear and predictable regulatory regime would “enhance investor trust, encourage inward investment and help create...high-paying specialised jobs”.

Industry research has suggested that up to 700 captive insurers could be formed or moved to the UK under an enabling framework, providing an important home for captive insurers and boosting London’s position as a global risk management hub.

Christopher Croft, chief executive of the London and International Insurance Brokers’ Association, welcomed the government’s commitment to moving the initiative forward.

“This will provide a valuable alternative for our members when seeking the optimal outcome for their clients’ risk management needs," he said. "It should also consolidate London’s position as the risk management capital of the world by ensuring all necessary solutions are achievable here."

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