ID Podcast: Captives regime unlikely to see flood of entrants to the UK
Airmic’s chief executive warns the UK should be careful not to ‘wrap itself in red tape’ and be open-minded about the types of captives it will allow when it comes to creating a regime
Because of the effort and financial outlay involved in establishing a captive it will take time for the UK market to develop, Airmic’s Julia Graham tells the Insurance Day Podcast
The UK should not expect the creation of a captives regime to result in a flood of captives into the market, the head of Airmic has said.
Julia Graham, chief executive of the association, said captives are increasingly becoming an important part of businesses’ risk management and the UK needs to have a regime in place or risk being left behind.
However, because of the effort and financial outlay involved in establishing a captive, she cautioned it would take time for the market to develop.
Speaking on the Insurance Day Podcast, Graham said: “I think you’ve got to be careful you don’t over-egg how much business is going to come. We do know of a few large captives that might want to choose the UK… [but] you’ve got to be proportionate. It takes time to build a market.”
She continued: “I think many organisations will stay with Guernsey for all the reasons they chose it in the first place. But [a London regime] gives people choice in a growing market.”
Graham also cautioned in creating its captive regime the UK should be careful not to “wrap itself in red tape” and be open-minded about the types of captives it will allow.
“We’d certainly like to see something this year,” she said. “We’re at a stage where we don’t want the UK to be left behind.”
Graham was speaking following the recent close of the UK government’s consultation on the creation of a captives regime.
After a delay cause by the 2024 UK general election, the Treasury began its long-awaited captives consultation in November last year, seeking views on whether UK should introduce separate regulatory provisions for "direct writing captives" and reinsurance captives, and allow captive cell companies .
In its response, Airmic said the UK needed to clearly define what would qualify as a captive re/insurer and offer a “proportional, risk-based regulator regime that facilitates a range of uses” if it wanted to be a competitive captive jurisdiction.
