Speech by Reeves on Detainees Met with Welcoming Response by LMG
UK Announces New Captive Insurance Regime to Boost Competitiveness
The United Kingdom has announced plans to introduce a new captive insurance regulatory regime, with the aim of driving opportunities for both multinational and domestically focused groups and boosting overall UK competitiveness. The proposed regime is part of a broader financial reform package known as the "Leeds Reforms," aiming to strengthen the UK's role as a leading insurance and risk management hub.
The new regime, which is expected to be introduced by mid-2027, has been in development since an early-stage consultation held by HM Treasury in November 2024. The official announcement was made on July 15, 2025, alongside the Chancellor’s Mansion House speech confirming the intention to proceed.
The key features of the proposed regime include simplified regulation, differentiated oversight, broader access, lighter touch and speed, regulatory collaboration, and a broad scope. The aim is to reduce capital requirements, administrative fees, and reporting burdens compared to existing insurance frameworks, while offering a more tailored supervision by the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA).
The new regime will also allow more types of firms, including financial services companies, to establish captives, and will permit captives to underwrite certain life insurance policies. Faster authorisation processes and proportionately lower capital and administrative requirements are intended to encourage growth and competitiveness.
The regime is being developed in consultation with the PRA, FCA, and industry stakeholders, including the London Market Group (LMG). The LMG has been advocating for a dedicated and proportionate regulatory regime for captives for several years. Caroline Wagstaff, CEO of the LMG, expressed pleasure at seeing the theme of a more tailored and proportionate approach to regulation in the House of Lords' views.
The LMG has also announced the publication of two documents focusing on what Government and the regulators need to do to safeguard the London Market's leading position in the years to come. The documents outline five concrete changes that the LMG has been campaigning for over the last year, including the introduction of the new captive insurance regime.
Sean McGovern, Chair of the LMG, stated that the announcement is evidence of the government recognizing the London Market's role as a contributor to growth. The UK captive domicile, with its extensive financial and professional services ecosystem, unrivalled range of local banking and asset management options, and the world's largest and most sophisticated reinsurance market, will benefit from the new regime.
The captive insurance industry is a rapidly growing global industry, with captive premium estimated to reach US$161 billion by 2030. The new UK regime is intended to enhance the UK's captive insurance market by attracting new formations, supporting economic growth through expanded insurance and risk management options, and securing the UK’s place as a global insurance center.
Martina Neary, EY UK Insurance Leader, commented that the new regime has the potential to drive opportunities for both multinational and domestically focused groups and boost overall UK competitiveness. The roundtable on the potential benefits of introducing a UK captive insurance regime, brought together by the City Minister and London Market Group, was joined by experts from across the global risk transfer value chain.
In conclusion, the new UK captive insurance regulatory regime is a significant step forward in strengthening the UK's position as a leading insurance and risk management hub. The regime promises greater flexibility, simplified compliance, reduced capital requirements, and streamlined reporting, which should better harness the potential of the UK's unrivalled insurance infrastructure.
- The new UK captive insurance regulatory regime, planned to be introduced by mid-2027, aims to enhance the UK's captive insurance market by attracting new formations, promoting economic growth, and securing the UK’s place as a global insurance center, particularly through reduced capital requirements and streamlined compliance.
- The proposed regime, part of the "Leeds Reforms," will permit captives to underwrite certain life insurance policies and allow more types of firms, such as financial services companies, to establish captives, enhancing the competitiveness of the UK's business landscape.
- The UK's captive insurance industry, projected to reach US$161 billion by 2030, will benefit from the new regime as it offers a more tailored supervision by the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA), along with regulatory collaboration, broader access, and lighter touch oversight.
