The UK government is set to introduce regulatory reforms aimed at establishing a promising new insurance market valued at billions of pounds, as part of its efforts to enhance national competitiveness.
According to insiders, Chancellor of the Exchequer Rachel Reeves is anticipated to unveil plans for a captive insurance framework in the UK during her Mansion House speech on July 15. This announcement follows a consultation initiated by the Labour government last year concerning captive insurers—specialized entities established by companies or public institutions to self-insure their risks.
According to sources who preferred to remain anonymous due to the sensitivity of the information, this initiative would enable London to better compete with established offshore hubs such as Bermuda and Guernsey. Proponents argue that captive insurers strengthen risk management and complement traditional insurance coverage, while critics caution that they may lead to a concentration of losses.
The proposals remain tentative, and the announcement date may still be subject to change, the sources 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.
UK Chancellor of the Exchequer Rachel Reeves; photo credit: Jacob King/WPA Pool/Getty Images
Insurers have been advocating for these changes for some time. According to a letter addressed to Chancellor Reeves in 2024 by Sean McGovern, CEO of AXA XL and chair of the industry lobby group London Market Group, along with Chris Lay, CEO of Marsh McLennan UK, the current UK regulations—under the Solvency II capital framework—are overly restrictive and are pushing business offshore.
The letter highlighted that, as a result, the UK is losing out on a market projected to grow to $161 billion worldwide by 2030. Meanwhile, countries such as the US, France, and Italy have all implemented regimes to attract captive insurers 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.”
