| Link(s): | Captive insurance – GOV.UK Captive_insurance_consultation1.pdf Chancellor announces consultation on UK captive regime – London Market Group |
Context
Announced as part of the Mansion House address, HM Treasury has published an open Consultation on Captive insurance in the UK, containing 17 Consultation questions.
The London Market Group has welcomed the announcement of the Consultation. stating that, if introduced, “…a UK regime could deliver an important risk management tool for UK and international PLCs, as well as reinforcing London’s position as the global centre for risk transfer and insurance.” There are two types of captives:
- Direct-writing captives: A captive insurer that insures the risk of one or more of its group members.
- Reinsurance captives: A captive insurer that reinsures the risk of one or more of its group members.
Key points to note and next actions
- Captive insurance is a method of self-insurance and risk management. A captive insurer is an entity that insures or reinsures the risk of other companies within the same group. Typical users are large, often multi-national, companies and professional services firms, although smaller businesses and public sector entities also establish captives.
- With sustained interest from stakeholders and in the context of a rapidly growing global captives market, the Government wishes to understand the potential of a new approach to captives “to support the growth and international competitiveness of the UK’s insurance sector”.
- There are similar moves afoot in the EU, I understand, where earlier efforts to regulate captives might not have been successful.
- Representations to Government have included that there should be:
- Lower capital requirements for captive insurers;
- Reduced application and administration fees;
- A faster authorisation process; and
- Reduced ongoing reporting requirements, compared to those for insurers and reinsurers.