Guernsey panel debate: captives go mainstream

Captives are no longer viewed as cyclical risk financing tools, but as permanent, strategic risk vehicles, panellists in the headline plenary debate discussed. They’ve become integral to how global companies approach risk –  incubating emerging exposures, closing protection gaps and driving innovation:

“Captives are no longer just about pricing or availability in hard markets,” noted Airmic CEO, Julia Graham. “By contrast, more companies are thinking ‘captive first’ to ensure that opportunities are not missed and that captives are central to group risk financing strategies.”

With the global risk landscape becoming more volatile – driven by climate change, geopolitical unrest, cyber threats and growing protection gaps – captives are proving their worth as long-term, structural tools. They're uniquely suited to respond to difficult-to-insure risks, enabling businesses to experiment, self-insure, gather data and eventually transition those exposures into the mainstream market.

As John Rowson, managing director at Howden, noted: “They act like sandboxes, allowing companies to test and mature their risk financing approaches.”

This evolution is further evidenced by the global legislative landscape: mainstream jurisdictions like France, Italy and now the UK are moving to introduce or modernise captive regimes. Far from being seen as tax-saving devices — a reputation that dogged them in previous decades — captives are now widely recognised as economic enablers and tools for  competitiveness.

A new era for the UK: targeting summer 2027

Momentum is clearly building in the UK, where the government is preparing the groundwork for a domestic captive insurance regime. A public consultation was launched earlier this year, with government and regulators engaging widely with industry stakeholders, including Airmic, via its Sector Expert Groups.

The UK government is casting its consultation net wide, and it is especially encouraging to see it engaging in direct discussions with at least 20 Airmic members, said Graham.

While the process may take time, with legislation required to pass through Parliament, it is anticipated that captive regulation will be in place by summer 2027, delegates heard.

The UK must be competitive and add value to businesses, but it does not need to design its framework from scratch, argued Caroline Wagstaff, CEO of the London Market Group. “The UK doesn't need to reinvent the wheel — there are excellent examples to follow.”

Industry participants are urging policymakers to focus not just on regulatory frameworks, but on execution. Drawing on Guernsey’s long-standing success as a captive domicile, panellists repeatedly emphasised the importance of an open, flexible and responsive regulatory culture.

“It’s not just about the rules,” noted Wagstaff. “It’s about how you execute them. It’s the culture, it’s the listening, it’s the responsiveness. That’s what gives companies confidence.”

Caroline Bradley, co-director of authorisations and innovation at Guernsey Financial Services Commission, agreed, adding: “The lesson we’ve learned in Guernsey is to always talk to and listen to businesses and to take them along on the journey. It’s a cliche, but we do always try and work closely with the industry.”

Guernsey’s view: optimism – and a note of caution

As the UK prepares its entry into the captive space, attention turns to Guernsey –  Europe’s largest captive domicile and a key partner to the UK insurance market.

Guernsey industry leaders struck a tone of optimism and pragmatism. They recognise the UK’s move as part of a broader industry shift toward the normalisation and growth of captives – a development that ultimately expands the global market.

“There’s enough room for everyone,” said Paul Sykes, managing director at Aon Insurance Managers (Guernsey) Limited. “Guernsey and the UK can –  and should – be complementary.”

Some in Guernsey have voiced caution about maintaining high standards and avoiding a “race to the bottom” in terms of regulatory competitiveness. As Sykes put it, “We shouldn’t cheapen the offering. We’re like a luxury brand — like Chanel or Rolex. You don’t discount premium quality.”

The island's success has been driven by three core factors, the panel agreed: certainty, flexibility and access to the regulator. With over 330 captives and hundreds of licensing precedents, Guernsey offers a tried-and-tested ecosystem that businesses trust. In contrast, newer domiciles often lack the volume of case law or regulatory track record that provides clients with confidence.

“I can tell you exactly how the regulator in Guernsey will respond, because we’ve asked that question before,” said Rowson. “That certainty is difficult to replicate.”

The competitive edge: what makes the UK attractive?

The jury will be out on the new UK regime until the legislation is finalised, but all agreed it will bring unique strengths to the table. Chief among them is location.

London is a global epicentre for insurance, finance and risk management. The prospect of hosting a captive regime within walking distance of brokers, lawyers, reinsurers, regulators, and capital providers is a tantalising one. There’s power in proximity, the panel noted. Everything can happen in one square mile and you’re not flying eight hours to a board meeting.

Educating the market: a shared mission

Despite the growth of captives, awareness and understanding still lag in some areas. Many UK organisations – particularly in the FTSE 250 and public sector – remain unfamiliar with how captives work or how they could benefit from them.

Guernsey has made a concerted effort to be at the forefront of education around captives, noted Bradley. “For many years, within the International Association of Insurance Supervisors, we've made the case for captives being legitimate risk financing and insurance vehicles.”

Despite this, there remains a huge knowledge gap internationally. Bridging this gap is a shared opportunity for Guernsey and the UK. Captives are complex, but they offer powerful solutions for businesses seeking control, customisation and continuity in their risk programmes. Collaboration between regulators, industry groups and educators will be key.

“We compete, but we also collaborate,” one speaker summarised. “And ultimately, the customer is better off for it.”