The Bank of England and the Financial Conduct Authority laid out plans for a captive insurance regime, according to a statement Tuesday. Captive insurers are entities set up by companies or public institutions that provide their own cover.
The UK has proposed rules to help encourage a potential new insurance market worth billions of pounds as part of a drive to boost competitiveness.
The Bank of England and the Financial Conduct Authority laid out plans for a captive insurance regime, according to a statement Tuesday.
Captive insurers are entities set up by companies or public institutions that provide their own cover.
The proposals include:
A streamlined PRA/FCA authorization process with a target of 4-6 weeks;
Excluding captives from Solvency UK and Consumer Duty requirements;
Lower capital and reporting requirements;
A flexible capital resources framework;
Dedicated PRA supervisory resource;
Specifically tailored FCA conduct requirements, including proportionate supervision and reporting.
Insurers have long lobbied for the changes, arguing a less restrictive regime would allow London to compete more effectively with offshore centers like Bermuda and Guernsey. While supporters say captive insurers enhance risk management and can add to external cover, critics warn that they can concentrate losses.
The new regime will come into effect next summer following an industry consultation, the regulators said Tuesday.
“We welcome the continued progress toward a UK captive insurance regime,” said James Addington-Smith, CEO of Marsh Risk UK, a unit of the world’s largest insurance broker.
“We will work closely with government and regulators to help shape a framework that is proportionate, competitive and practical to implement.”