PRA steps up a gear on UK Captive regime and tells Airmic members: “we are listening”

Shoib, His Majesty’s Treasury (HMT) published its captive consultation response in July 2025. Since then, the PRA has instigated a significant body of work. Can you give our members a sense of what’s being going on?

Firstly, I’d like to thank Airmic, its members and its leadership for your on-going engagement with us.

We’ve been working extensively behind the scenes, with our colleagues in the FCA, on how we will develop a regulatory captive regime for the UK that will be competitive and contribute to growth.

When the Chancellor gave it the green light at Mansion House in July 2025, that work went up a gear and the PRA has held a series of Subject Expert Group meetings, drawing together a range of stakeholders from captive owners, consultants, trade bodies and insurers.

We’ve supplemented this with bilateral meetings with interested parties, information gathering and speeches to keep a wider audience informed of our intentions.

You’ll also see reference to our captive work in our 2026 Insurance Priorities letter published on 15th January, highlighting the importance we’re placing on it during the year ahead.

A significant number of our members have participated in the PRA Subject Expert Groups (SEGs) that you referenced and have been impressed with the PRA’s openness and engagement. For those unable to participate, could you provide an overview of the discussions?

We’ve held six meetings which focused on different topics including reactions to HMT’s captive consultation response, how captives support innovation, authorisations, capital, reporting, oversight, and employee benefits. Meeting summaries are available on the PRA website.

One of the messages we heard loud and clear was that any regime needs to be proportionate and our implementation needs to be responsive and flexible.

So, the key for us will be ensuring we can meet those expectations while ensuring an appropriate balance of our secondary objective of competitiveness and growth alongside our primary objectives of financial stability and policyholder protection.   

You recently gave a speech at the Insurance Innovation Summit in which you set out your ambition to create a UK framework that was ‘internationally competitive’. Can you provide a bit more insight for our members into what that means to you?

Our vision is for a regime that is responsive in terms of authorisation; has proportionate capital and oversight requirements; and is flexible in terms of responding to different business needs and the classes of risk that could be ceded to the captive.

But we recognise that’s just the start, so we’re also keen to explore how all the skills and experience that already exist in the London market could translate into a USP for captives choosing the UK.

We’re also looking to allow the set-up of protected cell companies. That means those looking for simpler, easier or more short-term options will be able to look to the UK too.

We’re hoping that means it won’t just appeal to large corporates – for whom the full range of international options is available – but also mid-market firms or those with specific risk financing needs.

We are particularly keen to appeal to UK mid-market firms for whom the current, offshore options are not suitable but who could benefit from the risk management advantages of establishing a captive.

You also spoke encouragingly about the role captives can play in innovative risk management strategies. How do you see this dovetailing with your primary objectives of financial stability and policyholder protection?

I’m glad you’ve asked this question as the PRA must always act to enhance its statutory objectives.

In my recent speech, I said we recognised that captives can allow for risk management advances and assist in fuelling product development and innovation as risk incubators – where emerging risks are initially housed in a captive to build a data track record before moving to the insurance market.

This would help the organisation to understand the risk and provide credible data to insurers or reinsurers if part or all of the risk needs protection.

In other words, captives can allow for safe innovation – by working in partnership with the (re)insurance market - and ultimately facilitating competition within the insurance market itself.

So, the development of a UK captive regime advances both our primary and secondary objectives.

Airmic has been advocating for a UK captive regime for a number of years; clearly we’re hoping for a positive response from (new and existing) captive owners to any UK regime. What would the PRA view of success look like?

One of the things we would like to understand is what the pipeline might look like for the first 12 months of any regime – so if anyone is thinking about a captive in the UK please do liaise with your representatives or trade bodies.

More generally, we know we’ve got to get the basics right for firms to want to pick the UK for a captive. If we do that, we hope there will be interest from participants in three main categories – at least initially – while the regime beds in: those considering a captive for the first time; those considering a second captive, to bring everything together in the UK; and those considering redomiciliation (though we’re aware that many owners of existing captives will be content with their current choice of domicile).

Beyond that, success will be getting the feedback that we are responsive, flexible and proportionate in our engagement with stakeholders; and of course, ultimately that we have people choosing the UK to set up captive insurance vehicles.

Finally, can you remind us about the timelines for the implementation of a UK regime?

We’re looking to issue a consultation in summer 2026, with a regime planned in mid-2027. That might sound like a long time, but we’re trying to develop and build a new regime from scratch, and getting that right requires policy development, stakeholder engagement, cost-benefit analysis and legislation.

It’s quite a challenging timetable from a regulatory perspective but your members should be assured that this is a priority for us and we are planning on hitting the ground running!

Airmic members will have the opportunity to hear the PRA speak at its Captive Forum in March. For more information about the development of the UK captives insurance market, visit Airmic’s Captives Hub.