Latest developments from the London Market;
Experts from across the global risk transfer value chain joined City Minister Andrew Griffith to consider the potential benefits of introducing a UK captive insurance regime. The roundtable was brought together by the City Minister and London Market Group, the City’s trade body for commercial (re)insurers.
The event was attended by captive owners, brokers, insurers and the wider risk management community. This is the first time government has convened market experts to listen to the benefits that a captive regime could bring to the UK.
The creation of a UK captive framework is a key pillar of the LMG’s roadmap to improve the business environment for risk transfer in the UK, and a part of its latest Plan for the Future which launched today.
Andrew Griffith, Economic Secretary to the Treasury said: “It was great to get round the table today with key industry leaders and financial services regulators to explore the case for designing a competitive UK captive insurance regime. I am thankful to the London Market Group for bringing us all together and I look forward to continuing to work with industry to support growth and international competitiveness across the UK’s insurance sector, helping ensure the UK remains a world leading destination for risk management solutions and insurance innovation.”
Caroline Wagstaff, CEO of the London Market Group, commented: “The London Market is very grateful to the City Minister for his energy and focus on helping the market to thrive through the possible introduction of new products. Despite being the global hub for risk transfer, the UK’s regulatory regime is not conducive to businesses setting up captive insurers here. This is a rapidly growing global industry; with captive premium estimated to reach US$161 billion by 2030, and other jurisdictions – including France and more recently Italy, are opening their doors.
“If we are to remain the place where business comes for risk transfer advice and solutions, then not having this string to our bow means we are not keeping pace with new and innovative methods of risk management. A UK captive domicile would offer participants an extensive financial services ecosystem; London-based global brokers with extensive captive consulting experience, an unrivalled range of local banking and asset management options and the world’s largest and most sophisticated reinsurance market.”
A captive is a subsidiary of a company and acts as an (re)insurer for that company alone. While there is a large and growing international market for captive insurance, the UK does currently not have a specific legal and regulatory framework for hosting captives.