Ahead of promised British Government consultation on a new policy governing captive insurance, industry leaders have lobbied authorities to encourage the creation of a specialised, friendly regulatory regime for captive insurance companies, the Financial Times has reported.

The FT said that the “UK insurance industry has urged ministers to adopt a light-touch regulatory regime for so-called captive insurance companies to encourage hundreds of businesses to bring these subsidiaries onshore and fill a gap in London’s specialist insurance market”.

Discussed in November, the planned government deliberation this year was aimed at establishing an environment to allow the flourishing of a captive insurance market in Britain.

Research from the London Market Group has suggested a market where some 700 captive insurers could be newly established or lured from Bermuda and other captive domiciles.

The trade body for commercial insurance and reinsurance, LMG has argued there would be benefits from onshoring captives.

Chief executive Caroline Wagstaff said there were “lots of good reasons why companies would want to come to the UK”.

Insurers said that the benefits to the captive parents could also relate to the typical requirement for board meetings to occur and underwriting decisions to be made in the domicile of the captive insurer.

It could mean an estimated economic value of £153 million (about $195 million) flowing from new UK captives, together with further long-term benefits, Ms Wagstaff said.

Chris Lay, the chif executive of Marsh McLennan‘s UK broker, was quoted by the newspaper that Britain was prevented from becoming a viable captive domicile because of its regulation and that the Government would have to demonstrate a willingness to be as accommodating as other captive jurisdictions.

He said his Marsh clients had set up 400 new worldwide captives since 2020, including providing cover for cyber and property catastrophe risks.

Creating a British captive framework is a major LMG strategy for developing a more helpful environment in building up the British insurance industry.

In September, LMG together with the City Minister, convened a think-tank of experts – including key industry leaders and financial services regulators – to determine why and how this could be realised.

After joining the round table, Andrew Griffith, the Economic Secretary to the Treasury, indicated support for the exploration of “the case for designing a competitive UK captive insurance regime”.

He pledged to continue working “with industry to support growth and international competitiveness across the UK’s insurance sector, helping ensure the UK remains a world-leading destination for risk-management solutions and insurance innovation”.

Ms Wagstaff said at the time: “Despite being the global hub for risk transfer, the UK’s regulatory regime is not conducive to businesses setting up captive insurers here.

“This is a rapidly growing global industry; with captive premium estimated to reach $161 billion by 2030, and other jurisdictions – including France and more recently Italy, are opening their doors.

“If we are to remain the place where business comes for risk transfer advice and solutions, then not having this string to our bow means we are not keeping pace with new and innovative methods of risk management.

“A UK captive domicile would offer participants an extensive financial services ecosystem; London-based global brokers with extensive captive consulting experience, an unrivalled range of local banking and asset management options and the world’s largest and most sophisticated reinsurance market.”