UK regulators are looking to replicate measures typically in place around the world in their approach to captive insurance for employee benefits, according to trade body Grid.
The body was also reasonably encouraged by the response from the captive sector to engagement by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA).
Grid spokesperson Katharine Moxham (pictured) spoke to Health & Protection following the publication of the latest consultations on the UK’s new captive insurance regime by the FCA and PRA.
The plans outlined that employee benefits such as group risk and health benefits would need to include a fronting insurer to administer the scheme, although the captive would be funding it.
On the substance of the proposals, Moxham said not very much had changed from a UK perspective in terms of how schemes would operate, aside from bringing them into the UK.
“It has always been the case that the captive has to use a fronting insurer in the relevant country,” she said.
“It looks like the regulators are trying to replicate what has gone before, but this is for the UK market not offshore.”
Uptake of the new regime has always been the main question, which Moxham previously raised when initial activity was announced last year.
In its latest consultation, the FCA estimated between 40 and 150 captive schemes would take-up the UK regime in the first decade.
Moxham was again uncertain how big an impact it would have: “You might build a product or regime, but it doesn’t mean anyone will come,” she continued.
“It looks like there has been a reasonable response from the captive sector so I’m guessing there’s some interest.
“But it needs to be a particular type of company to consider this in the first place and it’s not something typically used much in the UK as the insurance market here is so competitive.”
Moxham also added that the group risk trade body’s regulatory committee was considering the proposals and whether to respond.
