Airmic welcomes consultation on new UK captive regime

UK risk and insurance management association Airmic has welcomed its government’s plans to create a new onshore captive-friendly regime, and is ready to work with members, regulators and the risk transfer industry to help ensure any legislation comes up to the mark.

The government announced during its Autumn budget last week that it will consult on introducing a new UK regime for captive insurance companies.

“The government will consult on the design of a new framework for encouraging the establishment and growth of captive insurance companies in the UK. The consultation will launch in Spring 2024,” it said.

And Airmic has told Commercial Risk Europe that it is pleased by the news and is more than ready to play its part to move things forward.

“Airmic welcomes the commitment from government to hold a consultation in 2024 concerning the introduction of a captive regulatory regime in the United Kingdom. We look forward to working with the government, regulators and the wider insurance community to ensure any proposed captive legislation is fit for purpose and supervises captives proportionately in a risk-based solvency regime,” said the association’s CEO Julia Graham.

Airmic will no doubt have an important role to play. As Graham pointed out, it represents, and is in touch with, a wide range of captive owners that utilise established captive domiciles around the world through its Captive Special Interest Group.

“We will work to collect their views on what a good UK captive domicile should look like,” said Graham.

The London Market Group (LMG) has been working hard to lobby for a UK captive regime.

In mid-September, the LMG brought experts from across the global risk transfer value chain to meet with UK minister Andrew Griffith to consider the potential benefits of introducing new UK captive rules. This regime will now go out for consultation.

The event was attended by captive owners, brokers, insurers and the wider risk management community, including Airmic. It was the first time the UK government has convened market experts to listen to the benefits that a captive regime could bring to the UK.

Graham and Airmic’s captive ambassador Richard Cutcher, as well as several Airmic members that own captives, shared their thoughts on the benefits of captive insurance and what a good captive regulatory regime might look like.

Graham stressed that a proportionate and fit-for-purpose regulatory captive environment would need to be developed with clear guidance and commitment from government, and would need regulators that demonstrate they are prepared to back captives for the long term.

Cutcher reiterated Airmic’s stance that any UK captive regime should be implemented outside of Solvency II so captives can be regulated on “a more proportionate basis”.

The UK initiative follows a similar move made in France to create a more captive-friendly environment, with strong support from the country’s risk management association Amrae. This has led to the relocation of captives from specialist domiciles and created a number of new onshore captives in France.

Solvency II has been a barrier to captive growth in Europe because it is generally accepted that national supervisors have failed to deliver the lighter touch proportionate treatment to captives that only write parent company risks.

Ferma and other bodies such as the European Captive Insurance and Reinsurance Owners’ Association (Eciroa) have fought long and hard to try to win this proportionate treatment since the capital adequacy and reporting regime was first introduced.

The good news is that they appear to have been heard. The message from the European Insurance and Occupational Pensions Authority (Eiopa) is that proportionality will be more firmly enshrined within Solvency II when its current review is completed.

This will give a boost to other national risk and insurance management associations in Europe such as Anra in Italy, GVNW in Germany and Igrea in Spain to push their national supervisors and governments to follow the French and now UK leads on captives.