The UK government is planning to announce rule changes to help create a potential new insurance market worth billions of pounds as part of a drive to boost competitiveness.
Chancellor of the Exchequer Rachel Reeves is expected to lay out plans for a captive insurance regime in the UK around her Mansion House speech on July 15, according to people familiar with the matter. It follows a consultation kicked off by the Labour government last year on captive insurers, which are entities set up by companies or public institutions to provide their own insurance.
The move would allow London to compete more effectively with offshore centers like Bermuda and Guernsey, the people said, asking not to be identified discussing private information. While supporters say captive insurers enhance risk management and can add to external cover, critics warn that they can concentrate losses.
Read more: UK Insurers Call for Rule Change to Establish Captive Insurance Regime
The proposals aren’t finalized and the date of the announcement could still change, the people added.
“We are consulting on the future of the captive insurance sector to better support growth and international competitiveness,” a spokesperson for the Treasury said.
Insurers have long lobbied for the changes. Current UK rules — governed by the Solvency II capital regime — are too restrictive, driving business offshore, according to a letter sent to Reeves in 2024 by AXA XL Chief Executive Officer Sean McGovern, who chairs industry lobby London Market Group, and Chris Lay, CEO of Marsh McLennan UK.
That means the UK is missing out on a market estimated to reach $161 billion globally by 2030, the letter said. The US, France and Italy have all introduced regimes to bring captives onshore. Lay stressed earlier this year that “any new framework must be built with appropriate and proportionate regulation and capital requirements.”
David Hogg, a managing director at Aon, said he hopes any new rules would lead to “new formations for UK organizations that previously hadn’t considered forming a captive” and attract “existing captives from other jurisdictions outside of the UK to consider redomiciling to here.”
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