Remarks on Reeves' Remarks About His Captives

Remarks on Reeves' Remarks About His Captives

UK Set to Strengthen Position as Risk Management Capital with New Captive Insurance Regime

The United Kingdom is gearing up to consolidate its position as the risk management capital of the world, with the government's plan to introduce a new captive insurance regime. This development, announced by the UK Chancellor, Rachel Reeves, is expected to attract investment, create jobs, and strengthen national resilience in the post-Brexit economy.

The London Market Group (LMG), an organisation representing the interests of the London insurance market, has welcomed this government plan. They are confident that a UK regime for captive insurance companies will deliver growth in the UK economy. The LMG's confidence is based on the potential benefits this regime can offer, such as attracting investment, creating jobs, and strengthening national resilience.

Industry leaders have highlighted several key factors necessary for the UK's captive insurance regime to succeed. These include lower and proportionate capital requirements tailored to captive risk profiles, streamlined and accelerated authorisation processes reducing setup times from weeks to days, reduced reporting and administrative burdens compared to traditional insurers, integration into frameworks such as Protected Cell Companies (PCCs) to facilitate establishment by smaller businesses, and alignment with international regulatory standards found in leading captive domiciles like Bermuda and Singapore.

Addressing the challenge of "passporting" rights post-Brexit for EU-based risks is also crucial to ensure attractiveness to cross-border businesses. Cultivating a skilled talent pool in captive insurance to support broader market growth is another essential factor. These reforms are part of a broader government strategy aimed at enhancing competitiveness in the UK financial services sector, which industry leaders see as pivotal for stimulating economic activity and job creation in the insurance market.

Christopher Croft, Chief Executive of the London & International Insurance Brokers' Association (LIIBA), has welcomed the government's plan to build a captives regime in the UK. LIIBA looks forward to working with the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) to ensure the success of the captives regime. Stephen Cross, head of strategy and innovation at McGill and Partners, views this as an exciting and important step forward for the UK insurance market.

Three industry associations, LMA, IUA, and LIIBA, are working together on new guidance from the FCA on non-financial misconduct (NFM) in the wholesale specialty insurance market. The FCA has published a report on NFM, and the LMG's work on the new guidance is focused on reducing non-financial misconduct in the market.

The Institute and Facility of Actuaries (IFoA) is supportive of the Chancellor's efforts to stimulate more growth in the UK economy. They support the Chancellor's plans to improve Defined Contribution (DC) and Local Government Pension Scheme (LGPS) in the UK.

London offers a unique mix of capacity, expertise, and infrastructure that creates a compelling onshore alternative for UK and international companies. McGill and Partners, a leading consultancy firm, are reviewing the legislation to determine optimal strategies for organisations to benefit from the new captive insurance regime. They see the UK as being in a prime position to potentially become the world's leading insurance domicile for captives over the next decade.

The success of the captives regime, however, depends on a culture within the regulators focused on making it work. LIIBA emphasises this point, stating that a culture within the regulators that is focused on making the captives regime work is crucial for its success.

In conclusion, the UK's new captive insurance regime is expected to be a significant step forward for the UK insurance market. With its potential to attract investment, create jobs, and strengthen national resilience, it has the potential to consolidate London's position as the risk management capital of the world.

1. The London & International Insurance Brokers' Association (LIIBA) is collaborating with the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) to ensure the success of the new captive insurance regime, which aligns with the UK's goal of strengthening national resilience and becoming a leading insurance domicile.
2. The Institute and Facility of Actuaries (IFoA) supports the UK government's initiatives to boost economic growth through improving Defined Contribution (DC) and Local Government Pension Scheme (LGPS), and they view the captive insurance regime as another critical step towards this goal.
3. Innovation in the captive insurance industry is evident, as three industry associations like LMA, IUA, and LIIBA are developing new guidance from the FCA to reduce non-financial misconduct in the wholesale specialty insurance market, demonstrating a commitment to regulation and a focus on long-term sustainability.

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