UK moves to enter global captives market with new regulatory framework

The UK is positioning itself to become a significant player in the global captive insurance market, following Chancellor Rachel Reeves’ confirmation of plans for a new regulatory framework that will allow captives to be domiciled onshore.

The long-anticipated move was confirmed in Reeves’ Mansion House speech on 15 July, where she pledged to create a “genuinely competitive, bespoke captive insurance framework” in the UK.

Industry voices including re/insurance broker Aon and risk managers’ and insurance buyers’ membership association Airmic have welcomed the announcement, with preparations already under way to capitalise on the expected demand.

Aon revealed it will launch a new UK-based captive management company once the regulations are in place. The move anticipates a surge of interest from UK organisations that have previously looked to offshore domiciles such as Bermuda, Guernsey or Vermont.

“We are fully supportive of the government’s announcement which will position the UK firmly on the global captive map,” said Ciaran Healy, global captives leader at Aon.

“For a long time, captives have played a central role for organisations looking to optimise their overall risk financing strategy and the numbers of captives globally has continued to grow since the concept was developed in the 1960s.”

Healy added that the UK is a natural contender for a competitive captive domicile, citing its strong insurance infrastructure and appetite for innovation. “The UK is already home to the world’s leading insurance marketplace in London and it’s only natural that it should also be a competing jurisdiction for captives. The UK has the expertise, reputation and drive for innovation that will ensure success.”

Aon’s new UK captive management company will offer an alternative to overseas jurisdictions, providing clients with greater flexibility in how they structure their risk financing. According to Healy, the regulatory shift could attract not just new captive formations but also lead to existing captives re-domiciling to the UK.

“The right regulations would result in two things,” he said. “Firstly, new formations for UK organisations that previously hadn’t considered forming a captive, but secondly, it could also attract existing captives from other jurisdictions outside of the UK to consider re-domiciling to here.”

Airmic, the UK risk management association, hailed the move as a breakthrough after more than two years of lobbying for a bespoke regulatory regime. Consultations are scheduled for summer 2026, with implementation targeted for mid-2027 in collaboration with the Bank of England’s Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA).

Julia Graham (pictured), CEO of Airmic, described the move as a significant boost for UK businesses and risk managers.

“The UK is home to some of the top risk and risk-financing expertise in the world,” she said. “With global demand for captives growing, having an onshore captive domicile alongside the world’s most advanced commercial insurance market will be a huge asset to our members and other captive owners.”

Graham said the announcement would give prospective captive owners and existing captives greater diversity of choice, especially as captives increasingly support mainstream and emerging risk strategies.

“It will strengthen their options to deploy captives in new areas and to achieve intelligent and resilient risk financing strategies,” she said.

According to Airmic’s own research, its member organisations collectively spend more than £5.1bn in annual premium through their captives and hold over £22.6bn in captive assets. Among those not currently using a captive, nearly three-quarters are exploring the possibility of forming one in future.

The association welcomed the government’s consultation response, which signals a commitment to “proportionately lower capital and reporting requirements and facilitating faster authorisations for captive insurers” – a move it said would enable a “broader scope than originally proposed” for the UK regime.

Airmic’s captive ambassador, Richard Cutcher, said the UK had a genuine opportunity to offer something distinct to captive owners globally.

“The UK has the opportunity to be a genuinely unique option for captive insurance companies,” he said. “Airmic members and captive owners globally have a wide choice of captive domiciles to choose from already, but if the UK can pitch its regulation right, it will be another stand out option for UK and international businesses.”

That sentiment was echoed by Scott Feltham, group head of insurance at Compass Group and a member of Airmic’s board.

“The UK has long been the epicentre of insurance,” said Feltham. “An ambitious UK captive insurance regime will further reinforce this position, making the UK the foremost domicile for transacting insurance business. This will also serve as a key contributor and add greater diversity to the UK’s wider financial services ecosystem and the broader economy.”

Captives have become increasingly mainstream in recent years as organisations adopt them for strategic risk financing, innovation incubation and complex or emerging risks such as cyber, sustainability and blended catastrophe protection.

“There are more quality domicile options available to Airmic members than ever before,” said Graham. “Each captive will have a different risk profile, business or plan or ownership structure, which in turn will influence which domicile is appropriate.”

While offshore British jurisdictions such as Guernsey remain popular due to their established reputation and proximity to London, the promise of a robust UK-based regulatory framework offers a compelling new option.

“It is imperative to develop a compelling offering in what is an increasingly competitive landscape,” added Graham. “This means establishing a proportional, risk-based regulatory regime, that balances quality with agility and facilitates a range of uses.”