The Prudential Regulation Authority (PRA) is continuing its work on proposals for a new regulatory regime for captive insurers, following the publication of consultation paper CP11/26 in July.
Captive insurance allows a corporate group to insure or reinsure its own risks through a wholly owned insurance subsidiary, giving firms more control over risk financing and access to reinsurance markets. While captives are currently subject to the PRA’s and FCA’s regulatory frameworks, the PRA believes that a more proportionate approach could better reflect their typically lower risk profile.
The PRA has announced that it will hold an industry roundtable on 17 September 2026 to gather views on the proposals and provide further clarity on the consultation where needed.
Under these proposals, a new regime would initially apply to single-parent, or “pure”, captives which insure or reinsure risks within their own corporate group. It would sit outside the Solvency UK framework and introduce proportionately lower capital, governance and reporting requirements.
The proposals include a more flexible approach to capital resources, simpler governance expectations and dedicated supervisory arrangements.
The PRA is also proposing a significantly faster authorisation process, with an ambition to reach decisions within four to six weeks once a complete application has been submitted.
The FCA’s conduct proposals would work in parallel with the PRA regime; proportionately excluding captives from the scope of the Consumer Duty. There would, however, continue to be safeguards around the business captives can undertake, including restrictions on directly insuring employee benefits for individuals.
Overall, the proposals aim to make the UK a more attractive location for captive insurers to be established, by creating a simplified regulatory framework in which they can operate, while maintaining appropriate regulatory safeguards. This framework will reflect the typically lower risk profile associated with captives, as compared against commercial insurers.
The PRA consultation process on these proposals remains open until 14 October 2026, subject to the outcome of the consultation and the necessary legislative changes, implementation is anticipated in Summer 2027.