The Prudential Regulation Authority and Financial Conduct Authority published CP11/26 on July 14, 2026 proposing a tailored regime for single-parent captive insurers, with lower capital and reporting requirements, a joint authorisation process targeting four to six weeks, exclusion from Solvency UK and the Consumer Duty, consultation closing October 14 and launch planned for summer 2027.
Britain wants to be a more attractive home for captive insurers, and its two main financial regulators have now set out how. On July 14, 2026, the Bank of England published a news release announcing that the Prudential Regulation Authority and the Financial Conduct Authority are jointly consulting on a new regime for captive insurance. The consultation paper is PRA CP11/26, titled "A tailored regime for captive insurance". It closed on October 14, 2026, and the regulators say the formal launch is planned for summer 2027, after they have considered the feedback.
A captive is an insurance company that a business owns in order to insure its own risks, instead of buying all its cover from the commercial market. It gives a large organisation more control over pricing, capacity and how it manages its risks. Many multinational groups currently place their captives in other jurisdictions. The proposals are intended to offer a framework that is proportionate to the lower risk that captives pose, since they insure a corporate group's own exposures and not members of the public, while keeping appropriate safeguards.
The first point to understand is the scope. According to the Bank of England release, the proposal covers only single-parent captives, meaning captives that insure or reinsure the risks of their parent and of the parent's group companies. It does not yet cover protected cell companies, structures in which separate cells ring-fence the assets and liabilities of different participants. The regulators say they plan to consult on adding protected cell companies once the legislation needed to do so is in place. Anyone reading the consultation as a general captive regime for every structure should therefore note that this first stage is narrower.
The second point is the lighter prudential treatment. The release says the regulators propose lower capital and reporting requirements for captives, together with a flexible capital resources framework. It gives no capital figures, so the real cost of running a UK captive can only be judged once the detailed rules are published in the consultation paper and finalised. Captives would be excluded from Solvency UK, the prudential regime that applies to the UK's commercial insurers, and from the Consumer Duty, the conduct standard that is aimed at retail customers. The FCA would instead apply tailored conduct requirements, with proportionate supervision and reporting. The PRA would provide dedicated supervisory resource for captives.
The third point is speed. The regulators propose a joint authorisation process with a target of four to six weeks. For a company comparing domiciles, time to authorisation is one of the practical measures of how easy a jurisdiction is to use, and a published target is a commitment the regulators will be judged against. The release does not say what would stop the clock or how the target would be measured, so those details are matters for the consultation paper.
There is one express limit designed to protect employees. Captives may reinsure employee-benefits-related policies but may not insure them directly. The practical effect is that an employee who is covered by a benefits policy would still deal with a conventionally regulated insurer, with the captive standing behind it as reinsurer. This keeps individuals, who are not the intended customers of a captive, outside the lighter regime.
The release carries statements from both regulators. David Bailey, the PRA's executive director for prudential policy, said: "This bespoke regime for captives will enhance the UK's competitive edge in insurance." Sarah Pritchard, the FCA's deputy chief executive, said: "Our approach is pragmatic and proportionate, with appropriate safeguards in place." The release also points to a speech on captives by Shoib Khan at the AIRMIC annual conference on June 16, 2026, which preceded the formal consultation.
The proposals belong to a wider push by UK regulators to give weight to growth and international competitiveness alongside their core duties of protecting policyholders and the stability of the financial system. Supporters of the regime argue that a competitive captive framework would deepen the UK's insurance ecosystem, including the professional services that surround it. The release does not quantify the business expected to move to the UK, and it does not say how many captives might apply, so those arguments are expectations and not forecasts.
The scale of ambition should be kept in proportion. A regime that applies only to single-parent captives, with lighter capital rules, is a targeted offer to a specific kind of customer: corporate groups that want to retain more of their own risk and are weighing where to base the vehicle. It does not change how the UK's commercial insurers are regulated, and the release makes clear that the lighter treatment depends on the captive serving only its own group, which is why the employee-benefits limit and the single-parent restriction matter so much. What happens next is straightforward. The consultation closed on October 14, so the regulators are now reviewing responses. They will publish final rules before the planned launch in summer 2027, and the later work on protected cell companies depends on legislation. Companies thinking about a UK captive should read CP11/26 itself for the proposed capital resources framework, reporting requirements and authorisation steps, and should treat the details described here as proposals, not final rules.
Key Points
- 1The PRA and FCA jointly published consultation paper CP11/26, 'A tailored regime for captive insurance', on July 14, 2026; the consultation closed on October 14, 2026 and the regulators say the regime will launch in summer 2027 after feedback is considered.
- 2The proposals cover only single-parent captives, which insure or reinsure the risks of their parent and its group companies; protected cell companies are not yet included, and the regulators plan to consult on them once the necessary legislation is in place.
- 3Lower capital and reporting requirements and a flexible capital resources framework are proposed, though the news release gives no capital figures; captives would be excluded from Solvency UK and from the Consumer Duty.
- 4A joint PRA/FCA authorisation process would target four to six weeks, with dedicated PRA supervisory resource and tailored, proportionate FCA conduct requirements.
- 5As a safeguard for employees, captives could reinsure but not directly insure employee-benefits-related policies.
Why This Matters
Captives are a way for large companies to manage their own risks, and many choose to base them overseas. If the UK regime attracts some of that business, it would bring related work in actuarial, legal and management services onshore, which is the competitiveness argument the regulators and the government are making. For companies deciding where to establish a captive, the practical questions are speed, cost and certainty: a four-to-six-week target and a lighter capital regime address the first two. The proposals are still a consultation, so the final rules, and the capital levels, may change, and the regime will not be open for applications until it launches in 2027.
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