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The UK Chancellor of the Exchequer Rachel Reeves announced today that the UK will introduce a captive insurance company regime – a decision that was welcomed by brokers and trade associations across the London market.

The government aims to deliver a new, tailored regime for captive insurance, “making this method of self-insurance and risk management easier and more attractive to do in the UK, including through protected cell companies,” according to the document issued by the government, titled , which details various proposed financial services reforms, including the captive announcement.

Aon promptly responded with its own announcement that it was forming a UK-based Captive Management Company in preparation for the new regime.

The UK will become “a strong alternative domicile to other jurisdictions where captives are available (including Vermont and other US States, the Cayman Islands, Bermuda and Guernsey),” Aon said.

However, before the new regime can be rolled out, regulations must be developed. Regulators will consult on creating new rules for captive insurers in the summer of 2026, with a target date for implementation of the captive insurance framework in mid-2027, according to the HM Treasury document.

The right regulations would enable new formations for UK organizations that hadn’t previously considered forming a captive, while they also could attract “existing captives from other jurisdictions outside of the UK to consider re-domiciling to here,” according to Ciaran Healy, global captives leader at Aon, in a statement.

Aon is fully supportive of the government’s announcement which will position the UK firmly on the global captive map, Healy added. “For a long time, captives have played a central role for organizations looking to optimize their overall risk financing strategy and the numbers of captives globally has continued to grow since the concept was developed in the 1960s.”

As the UK is already home to the world’s leading insurance marketplace in London, Healy said, “it’s only natural that it should also be a competing jurisdiction for captives.”

Marsh Welcomes Captive Regime

Marsh, the insurance brokerage business of Marsh McLennan, also welcomed the UK government’s captive insurance reforms.

“Captive insurance is a long-established risk management tool, offering organizations greater choice in how they build their risk management strategy. It can help address traditional and emerging risk management pain points, enabling a greater control of risk and reduced costs,” said Marsh in a statement.

Marsh noted that the announcement also opens the potential for the formation of more flexible, cost-effective vehicles, such as protected cell companies (PCCs), that would benefit smaller and mid-sized companies.

“We welcome the government’s decision, which will make the UK a full-service insurance center through the addition of a captive insurance regime,” commented Chris Lay, CEO of Marsh McLennan, UK, who is a long-time proponent of a UK captives regime.

“Having previously run Marsh’s global captive business, I know that this has the potential to enable organizations of all sizes in the UK and around the world to have access to greater choice in how they manage risk and build the offering of our already world-leading insurance sector,” Lay said in a statement. “We need to ensure that the new captive framework will not only allow the UK insurance market to further demonstrate its reputation for innovation but also that captives can be formed as seamlessly as they are in other jurisdictions.”

McGill and Partners

Stephen Cross, CEO of London-based broker McGill and Partners Europe, said the new regime will provide very large domestic UK corporates with captive options that are closer to home, saving busy executives a lot of travel time.

While the legislation that will provide the regime’s framework hasn’t yet been developed, it is likely to facilitate re-domestications of existing captives as well as new formations for UK-headquartered companies, Cross said in an interview.

“Multinational companies can certainly benefit if they’ve got UK exposures or international exposures,” he said, noting that a huge beneficiary of the new regime will be Lloyd’s of London and the fronting capabilities that Lloyd’s provides.

Lloyd’s will be able to combine fronting, hand-in-glove, with captives, which will be of “exceptional benefit,” emphasized Cross who is also global head of Innovation and Strategy at McGill and Partners. (As of this writing, Lloyd’s hadn’t yet commented on the Chancellor’s announcement).

Ernst & Young (EY)

“With the UK becoming a more accessible domicile for captives under these proposals, UK-headquartered multinational groups are likely to benefit from onshoring or expanding their captive operations, leading to better risk management and easier market access,” according to Martina Neary, EY UK Insurance leader.

“In addition, the new regime enables regulatory and tax domiciles to be aligned, reducing tax complexities for UK-headquartered groups, while those groups focused on the UK market with offshore captives can simplify their operations,” Neary added. “Although navigating the new landscape will undoubtedly have its complexities, the potential benefits and opportunities for businesses will likely be substantial.”

Additional voices of approval came from industry trade groups – the International Underwriting Association , the London Market Group and the London & International Insurance Brokers’ Association.

International Underwriting Association (IUA)

The International Underwriting Association (IUA), which is the trade body for companies in London that provide international and wholesale insurance and reinsurance coverage, welcomed the announcement of the new regulatory regime for UK captive insurers.

“There is a tremendous opportunity for the UK to become a leading domicile for captive insurance companies. Both our world-class insurance talent pool and extensive financial ecosystem, in the London Market and nationwide, provide a strong foundation for this initiative,” said Chris Jones, chief executive of the IUA.

“A clear and predictable regulatory regime will enhance investor trust, encourage inward investment and help create more high-paying specialised jobs. In order to be successful, it must also be actively promoted, with responsive, cost-effective supervision that minimises market barriers to entry,” Jones said. “The prospect of a UK captives regime has already generated significant interest, and the IUA looks forward to working with the government in its promotion.”

London Market Group (LMG)

The London Market Group (LMG), which represents all London insurance businesses, welcomed the announcement by Chancellor Reeves.

“If London is to retain its position as a global center for risk transfer, it needs to be able to offer all the tools in the toolkit,” said Sean McGovern, chair of the LMG. “This announcement is clear evidence of the government recognizing the London market’s role as a contributor to growth and delivering on commitments to support the industry as we continue to enhance the market’s world-leading position.”

“Captives are taking center stage as part of the established and long-term risk financing strategies of many important commercial organizations. It is a rapidly growing global industry, with captive premium estimated to reach US$161 billion by 2030, and other onshore jurisdictions – including France and more recently Italy, are opening their doors,” McGovern continued.

“It is fitting that the UK is part of this growing sector, and critical for the London Insurance market so it can retain a leading global position with an enviable world class reputation,” he said.

Caroline Wagstaff, CEO of the LMG commented: “The announcement of the consultation on protected cell companies is very welcome as this offers real choice for UK companies of all sizes in the use of captives and genuine differentiation. A clear timetable to delivery is also a real plus, it will help everyone to track progress and work at pace to deliver a world-beating regime.”

London & International Insurance Brokers’ Association (LIIBA)

“LIIBA welcomes the Chancellor’s announcement that the government is going to progress the work to build a captives regime in UK,” said Christopher Croft, chief executive, London & International Insurance Brokers’ Association (LIIBA).

“This will provide a valuable alternative for our members when seeking the optimal outcome for their clients’ risk management needs. It should also consolidate London’s position as the risk management capital of the world by ensuring all necessary solutions are achievable here. But, as previous experience has shown, the regime will only deliver success if the technical framework is complemented by a culture within the regulators focused on making it work.”

Topics Agencies London