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Captives are wholly owned insurance companies set up by businesses to insure their own risks, providing a dedicated form of self-insurance and risk financing within a group structure.<\/p>\nShoib Khan, Director of Insurance Supervision at the Bank of England, said the PRA is moving to build a UK captive regime aimed at reversing decades of offshore migration, with 2027 set as the moment captives are finally \u201ccoming home\u201d to the UK.<\/p>\n
Captives are wholly owned insurance companies set up by businesses to insure their own risks, providing a dedicated form of self-insurance and risk financing within a group structure.<\/p>\n
Speaking at the Airmic Annual Conference in Birmingham, Khan outlined plans for a new UK captive insurance regime, underscoring exactly why they matter and what the UK\u2019s approach needs to look like to make 2027 the year they return to their historic home.<\/p>\n
\u201cWhen the PRA attended the original roundtable hosted by the City Minister in September 2023, the industry ask on captives was in its infancy, and we were at the early stages of thinking about what the UK captive regime could most usefully look like,\u201d Khan observed in his opening remarks.<\/p>\n
He continued, \u201cIn 2025, the PRA gained the powers to amend the relevant rules in its rulebook, giving us the means to create a bespoke captive regime.<\/p>\n
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<\/a><\/div>\n<\/div>\n\u201cFast forward through HM Treasury\u2019s own consultation papers and the Subject Expert Groups (SEGs) we held in collaboration with the FCA, and the scope on what captives might do has expanded significantly.<\/p>\n
\u201cThe use cases show clear potential for firms seeking to access additional risk-financing vehicles, while benefiting the UK insurance industry and economy more broadly and, as I\u2019ll explain below, advancing our own regulatory objectives.\u201d<\/p>\n
According to Khan, this latest evolution of a UK captive regime is not without precedent, with the UK boasting a long history with captives.<\/p>\n
The executive observed that from the 1920s and 1930s, a number of large UK corporates operated onshore, wholly owned, insurance companies to write the risks of their own groups.<\/p>\n
These vehicles reportedly insured everything from chemical and pharmaceutical risks, through shipping, energy and mining, to large industrial exposures.<\/p>\n
\u201cThey were, in many respects, early captives embedded in the businesses they served, closely aligned to risk management, and focused on long-term resilience rather than short-term profit. While a number eventually moved to offshore domiciles, one or two survived into more recent times,\u201d Khan explained.<\/p>\n
With a new captive regime expected in 2027, Khan noted that the ambition is to see an \u201conshore pivot\u201d, with captives, as the modern successors to those early arrangements, choosing the UK as a competitive and credible home.<\/p>\n
Khan added, \u201cFrom our perspective, the use case for captives is clear. If properly structured, captives have the potential to advance both the PRA\u2019s primary and secondary objectives.<\/p>\n
\u201cThey can be robust risk-financing and risk-management tools, helping to share risk across the system, match capital more closely to risk, drive data improvements across the market, and bridge protection gaps where commercial insurance capacity is constrained.<\/p>\n
\u201cThey can also act as incubators for emerging and hard-to-place risks \u2013 from cyber and climate-related exposure to supply-chain disruption \u2013 supporting innovation in insurance. These outcomes support prudent risk management and risk transfer, with positive implications for firms and the wider UK economy.<\/p>\n
\u201cOf course, we need to keep an eye on risks to policyholder protection, particularly where captives expand beyond their original purpose to write business outside of their own group.<\/p>\n
\u201cHowever, a balance can be struck by setting a clearly defined perimeter that enables captives to meet their core purpose as group risk financing vehicles without scoring any own goals. Whether we have struck the right balance here is an area where we would greatly welcome your input and feedback during our upcoming consultation.<\/p>\n
\u201cAnd if we get that balance right, creating a uniquely competitive UK proposition can deliver real, practical benefits for UK based companies. A captive based in the same location as the group itself brings tangible advantages: boards, brokers, advisers, fronting insurers and reinsurers all operating in a single time zone, with direct access to the unique ecosystem of the London insurance market.<\/p>\n
\u201cThis enables more efficient use of management time and supports simpler, more effective governance. Combined with the UK\u2019s strong reputation for regulatory and legal expertise, it forms a compelling and powerful proposition.<\/p>\n
Khan continued, \u201cThe \u2018goal\u2019, to borrow another footballing term, is to define a regime with a clearly marked field of play: what captives can and cannot do, and, critically, who they can and cannot insure. If we get those touchlines right, we can have an internationally competitive, responsive and bespoke regime that does not compromise safety and soundness or policyholder protection.\u201d<\/p>\n
Khan said the PRA expects to issue a consultation paper in summer 2026, and that this remains the current working assumption, with publication expected soon.<\/p>\n
He added that while he could not pre-empt all the details of the proposals, the PRA has been listening carefully and working closely with the FCA, and that several clear messages have emerged from engagement with stakeholders and industry experts.<\/p>\n
Khan went on, \u201cTo begin with, while experience of a UK regime builds, and lessons are collectively learned, our policy approach will be to operate carefully drawn boundaries that meet the core purpose of captives. We want a regime which is clear, transparent and easy to navigate for firms.<\/p>\n
\u201cIn thinking about our regulatory approach, we have found our engagement with external stakeholders to be incredibly useful. The discussions at our SEGs last year indicated that, for the regime to be competitive and commercially successful, there is a need for proportionality and clarity \u2013 particularly around capital and the role of contingent capital; as well as around governance and reporting requirements.\u201d<\/p>\n
Khan stated that the regime will continue to evolve over time, pointing in particular to HM Treasury\u2019s commitment to legislate for Protected Cell Companies (PCCs) to conduct insurance business, which could open up a new market for captive users in the UK.<\/p>\n
\u201cWe will continue to work closely with HM Treasury and intend to consult on incorporating PCCs into the regime once the necessary legislation is in place,\u201d He said.<\/p>\n
Khan concluded, \u201cWe accept that we are, in some respects, like a newly qualified cup team which means that we need to be determined to build credibility quickly and deliver consistently on what we say we will do.<\/p>\n
\u201cWe are conscious that the philosophy we bring to captive supervision will matter just as much as the rules themselves. Or, in other words, like any successful cup team, we need to match technical skill with ambition and a winning mentality.<\/p>\n
\u201cWe expect the regime to go live in mid-2027. Much like a pre-match warm-up before kick-off, between now and implementation we want to work with industry and potential captive owners to support a pipeline of potential applicants.<\/p>\n
\u201cWe recognise that a UK captive regime has real long-term potential, particularly as experience builds, confidence develops, and firms become more familiar with how captives can be used effectively within a UK regulatory framework. But we also recognise that the work would not end when the regime goes live. In many ways, that is when the most important phase begins \u2013 for firms and for the wider market, as well as for us.<\/p>\n
\u201cWhilst I have spent some time discussing the future of captives, it\u2019s also worth referring back to the rich history I mentioned earlier. The UK has long provided a home for innovative and entrepreneurial insurance expertise, and we hope that the proposed regime will further enhance its position as an internationally competitive marketplace.<\/p>\n
\u201cAnd so, to return to where I began \u2013 and as I promised at the start of my speech \u2013 if we get the framework right, and if we work together to make the regime a success, then, like the World Cup\u2026 It\u2019s coming home. Captives are coming home!\u201d<\/p>\n
The post Captives \u2018coming home\u2019 as PRA eyes 2027 UK regime launch<\/a> appeared first on ReinsuranceNe.ws<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" Shoib Khan, Director of Insurance Supervision at the Bank of England, said the PRA is moving to build a UK captive regime aimed at reversing decades of offshore migration, with 2027 set as the moment captives are finally \u201ccoming home\u201d…<\/p>\n","protected":false},"author":1,"featured_media":2199,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[11],"tags":[],"_links":{"self":[{"href":"http:\/\/ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/posts\/2197"}],"collection":[{"href":"http:\/\/ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/comments?post=2197"}],"version-history":[{"count":3,"href":"http:\/\/ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/posts\/2197\/revisions"}],"predecessor-version":[{"id":2201,"href":"http:\/\/ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/posts\/2197\/revisions\/2201"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/media\/2199"}],"wp:attachment":[{"href":"http:\/\/ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/media?parent=2197"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/categories?post=2197"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/ateliersfurrer.com\/index.php\/wp-json\/wp\/v2\/tags?post=2197"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}