The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) have proposed that captives be excluded from Consumer Duty requirements.
The proposal features in the bodies’ consultation on a tailored and competitive regulatory framework which would enable businesses to establish their own captive insurers in the UK.
New regime
Last month, Shoib Khan, director of insurance supervision at the Bank of England, told the Airmic Annual Conference in Birmingham that the PRA’s new UK captive insurance regime will go live in the middle of next year.
In July 2025, the treasury announced it was including the group life and employee benefits sector in its plans for the new UK captive insurance regime, having been excluded from the original proposals.
And at the end of the year, the FCA announced it was expanding its ongoing work in the captives insurance market to encompass a UK captives insurance regime.
Streamlined process and tailored resources
The bodies are a consulting on excluding captives from Solvency UK and Consumer Duty requirements, a streamlined PRA/FCA authorisation process with a target of four-to-six weeks, lower capital and reporting requirements, and a flexible capital resources framework.
The proposals also feature plans for a dedicated PRA supervisory resource, as well as a specifically tailored FCA conduct requirements, including proportionate supervision and reporting.
The framework includes appropriate safeguards. For example, to protect individuals, captives would be able to reinsure, but not insure directly, employee benefits-related policies.
Bespoke regime
David Bailey, executive director for Prudential Policy at the PRA, 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.”
Sarah Pritchard, deputy chief executive of the FCA, (pictured) 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.”
The consultation closes on 14 October 2026, ahead of launch of the new regime in summer 2027, after consideration of respondent feedback.
