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AM Best expects UK to field more competitive single-parent captive rules
The UK consultation runs until October 2026, with the regulators aiming to implement legislation as soon as July 2027.
AM Best said the UK insurance regulator’s consultation on a bespoke framework for single-parent insurance captives is expected to produce a captive regime that compares favorably with established captive domiciles. The new approach would be overseen by the Prudential Regulation Authority and the Financial Conduct Authority.
The consultation, released by the PRA and FCA nearly a year after the plans were first signaled, will remain open until October 2026, with the regulators targeting implementation of legislation as soon as July 2027. The scope initially covers single-parent captives, with potential later extensions to other structures such as group captives and Protected Cell Companies.
Under the proposals, UK captive insurers would be exempt from UK Solvency II requirements, instead facing proportionately lower capital and reporting needs. AM Best said this flexible capital requirement framework could strengthen the UK’s competitive proposition, with UK-domiciled corporations potentially considering captives there due to capital and operational flexibility, a lighter reporting burden, and a shorter processing timeframe.
AM Best also highlighted operational features of the proposed UK regime, including a single captive type that can write insurance on both a direct and reinsurance basis. The framework is also designed to allow non-life business alongside certain employee benefits business, which could help captives avoid separate licenses required in some other domiciles.