As few as 40 organisations out of a possible maximum of 850 will use the new UK captive regime, according to estimates from the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA).
The regulators said they were conservatively expecting “significantly lower” uptake than the total capacity of the market found by HM Treasury.
The 40 figure is the lowest uptake scenario presented by the regulators over the first 10 years of the regime’s operation, with a high growth scenario reaching 150 captives in the first decade.
The figures were released as part of the regulators’ joint consultations on implementing the UK’s new captive insurance regime and also include cost estimates for industry and the regulator.
Expected take-up
Responses to Treasury’s consultation on captives suggested around 300 to 500 organisations with UK operations used a captive insurer based in another jurisdiction and that a further 350 organisations could be potential candidates to establish a UK captive.
The FCA said this suggested there may be up to 650 – 850 firms who might consider establishing a UK captive under the proposed framework.
“However, we and the PRA conservatively expect actual uptake under our proposals could be significantly lower than the total capacity identified above,” the FCA warned.
“Many organisations may decide not to establish a UK captive for their own commercial or group-structural reasons or may prefer to retain their existing offshore captive arrangements.
“For example, 58% of respondents to a 2026 survey by industry body Airmic, said they would consider forming a new UK captive or moving their existing captive to the UK, though only some of this stated interest would likely materialise.”
Under the lower growth scenario, the FCA expects around five organisations a year for the first five years to either relocate or form new captives. It then reduces this to three per year for the second half of the decade.
In the high growth situation 20 organisations a year for the first five years either relocate or form new captives, which then plateaus at 10 per year for another five years.
The estimates were based on responses to the Treasury’s consultation, industry survey responses and comparison with international jurisdictions.
“Overall, we expect moderate growth which plateaus as those firms who wish to redomicile are likely to consider doing so in the earlier stages of the regime,” the regulator said.
“Given the uncertainty, in our projections we predict a broadly even split between businesses relocating their captive business to the UK and newly established captives.”
Cost of regime
The FCA said it will incur one-off and ongoing costs to implement the regime which were not expected to exceed £140,000 per year.
It did not expect one-off costs to be material in the context of the FCA standard expenditure on new policy-related projects, it said.
“We will also incur ongoing costs for the authorisation and supervision of captives. We expect this may require resources equivalent to approximately £140,000 per year, though resourcing would depend on the level of take-up by firms,” it added.
For firms considering using the regime, the only direct costs from the FCA’s proposals were one-off familiarisation costs for firms, which it expected to total between £1.8m – £2.4m, depending on market capacity.
All other costs to firms are indirect, for firms that decide to set up or relocate captives in the UK, the FCA added.
Latest proposals
In the latest consultation proposals, employee benefits such as group life and health insurance schemes will only be permitted on a reinsurance basis under the UK’s new captive insurance regime with another primary insurer being required.
The regulators also proposed that captives be excluded from Consumer Duty requirements.
The consultation closes on 14 October 2026, ahead of launch of the new regime in summer 2027, after consideration of respondent feedback.
