The Bank of England and the Financial Conduct Authority (FCA) have set out proposals for a dedicated captive insurance regulatory regime in the UK.
It is part of a wider push to strengthen the country’s “competitiveness” in financial services.
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The Prudential Regulation Authority (PRA) and the FCA have opened a consultation on the framework, with responses invited until 14 October 2026.
Captive insurers are entities set up by companies or public bodies to underwrite their own risks, rather than buying cover from the open market.
The regulators indicated that the initiative could support an insurance market worth billions of pounds.
The PRA, which sits within the Bank of England, oversees more than 1,500 financial institutions including banks, credit unions and insurers, with a remit centred on ensuring that companies hold sufficient capital and liquidity to guard against systemic risk.
The FCA, operating independently, supervises conduct across more than 50,000 financial services operators and markets in the UK.
FCA deputy CEO Sarah Pritchard said: “A competitive captive insurance option in the UK could benefit UK companies and support wider economic growth. Our approach is pragmatic and proportionate, with appropriate safeguards in place.”
Under the proposed framework, authorisation from the PRA and FCA would be streamlined, with a target turnaround of four to six weeks.
Captives would be excluded from Solvency UK and Consumer Duty requirements and would face lower capital and reporting obligations alongside a more flexible capital resources framework.
The plans also provide for dedicated PRA supervisory resource and conduct requirements from the FCA tailored to the captive model, including proportionate supervision and reporting.
The proposals include safeguards for individuals: captives would be permitted to reinsure employee benefits-related policies but not to provide direct insurance cover for them.
The regulators said the framework has been designed to be proportionate to the specific characteristics of captive insurance and is intended to draw on existing UK market expertise, positioning the UK as a base for global insurance and reinsurance business.
Subject to the outcome of the consultation, the regime is scheduled to launch in summer 2027.
PRA prudential policy executive director David Bailey said: “This bespoke regime for captives will enhance the UK’s competitive edge in insurance. Ahead of the formal launch in 2027, we are keen to speak to any businesses that could benefit from establishing a UK-based captive.”
