Google reportedly keen on Lloyd’s captive ahead of government consultation

Google has reportedly received a positive response from Lloyd’s to create a captive syndicate, in a move that could finally kick-start the ‘onshore’ captive market in the UK following recent significant progress in France and Italy.

London market insurance news service The Insurer reported that Apollo Underwriting is involved in the deal, for which in-principal approval has been granted.

Lloyd’s has been keen to launch a captive offering for many years now with little success. Good news came at the end of November last year, however, when the government announced during its Autumn Budget that it would 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.

Airmic told Commercial Risk Europe at the time that it was 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.

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

Lloyd’s moved early in its drive to build a new captive market through the introduction of a rule to allow for captive syndicates at the start of 2023. This is the syndicate option that Google is reportedly considering.

Lloyd’s has not commented on the potential Google captive syndicate. But it explains that the solution is a type of Lloyd’s syndicate set up by a group enterprise seeking to retain first or related third-party risks from groups such as employees, customers or contractors.

Lloyd’s says that setting up a captive in the market makes sense because its unique global licensing system gives the ability to underwrite direct insurance in 80 countries, and use fronting partners where Lloyd’s does not have insurance permissions.

“A captive with a significant volume of business in multiple territories where Lloyd’s has permission to underwrite insurance can find this a more cost-effective model… subject to local regulatory requirements, this can be on a single policy written out of London – complemented by Lloyd’s subsidiaries where required (Europe, Japan and China),” explains Lloyd’s.

The market says that it also offers control and consistency for risk managers. “The potential absence of fronting arrangements provides the captive with the ability to set and control their own risk appetites, retentions and wording, with the support of their managing agent, and the oversight of Lloyd’s,” it states.

Capital is a third core strength, says Lloyd’s. Captive syndicates share the financial strength rating of the Lloyd’s market. This can result in lower collateral requirements where fronting arrangements are necessary.