Captives come of age as UK regime promises new era of resilience
At the 2026 AIRMIC Captives Forum, held at Lloyd's of London, senior industry figures gathered to reflect on the findings of the latest AIRMIC Captives Survey. The panel discussion, featuring Julia Graham (pictured left), Oliver Davies (pictured right) and Paul Eaton (pictured centre), explored how captives are evolving from alternative risk transfer vehicles into strategic instruments for organisational resilience.
Opening the discussion, Graham reflected on the survey’s theme, “Captive resilience: strategy for the future”. She noted that while the word “resilience” risks overuse, its prominence signals a profound shift in how captives are perceived. What was once considered innovative or even niche has matured into a mainstream mechanism for strengthening business continuity and societal stability. Captives are no longer viewed merely as responses to hard market cycles; they are now embedded within broader enterprise risk management frameworks.
This maturation is reflected in the survey data. Although only 24% of respondents reported operating a fully-fledged “captive first” strategy—where the captive is the default vehicle for insuring group risk—an overwhelming 76% intend to expand their captive’s capital base. For Davies, this does not suggest that the captive-first concept is fading. Rather, it indicates that boards are still grappling with how best to deploy capital and fully exploit the captive’s potential.
Davies argued that captive-first strategies are not in decline but are instead “growing up”. The relatively modest proportion of formal captive-first programmes points to ongoing boardroom conversations about capital allocation, risk appetite and long-term value creation. Risk managers face the perennial challenge of securing board confidence and demonstrating that capital committed to a captive can generate measurable strategic benefit.
Central to this evolution is the role of data and emerging risks. The survey highlights increased focus on data analytics, artificial intelligence and improved risk insight. Captives are increasingly seen as laboratories for risk incubation—structures in which organisations can test responses to new and fast-evolving exposures. In a world where risk landscapes shift rapidly, the ability to underwrite and manage emerging risks internally offers both agility and strategic advantage.
Importantly, the survey confirms that captive formations continue even in softer market conditions. This counters the outdated notion that captives are purely cyclical instruments deployed in response to hard insurance markets. Instead, they are becoming enduring components of risk financing architecture.
The panel also examined how insurers—particularly fronting carriers—must adapt. Davies stressed that fronting insurers need to move beyond simply providing capacity. Instead, they should position themselves as enablers, offering structural flexibility, operational alignment and claims expertise that supports the parent organisation’s philosophy.
Pricing, while still relevant, is no longer the dominant criterion in selecting fronting partners. Survey responses suggest that flexibility, service alignment and innovation carry greater weight. Insurers capable of accommodating non-standard limits, bespoke retentions and evolving risk profiles will be better placed to support captive owners seeking to expand their programmes.
Turning to reinsurance, Eaton welcomed the survey’s reaffirmation of its importance. Access to reinsurance markets remains a cornerstone of captive strategy. While many captives operate at primary layers of risk, larger and more mature entities increasingly access treaty and facultative reinsurance, as well as alternative capital solutions.
Reinsurance offers more than additional capacity or rated balance sheets. It supports solvency management, facilitates risk transfer efficiency and provides valuable technical insight. Reinsurers’ expertise in pricing, coverage structuring and emerging lines can enhance a captive’s underwriting confidence. Knowledge transfer, Eaton argued, is a significant but sometimes underappreciated benefit.
Moreover, reinsurance can enable captives to write more meaningful lines without exceeding their capital comfort zones. For organisations at the start of their captive journey, partnering with reinsurers can bridge experience gaps and strengthen internal capability.
Governance emerged as another key theme. Eaton emphasised the importance of board composition and alignment between the captive’s risk appetite and that of the parent company. Without strategic alignment, a genuine captive-first approach cannot succeed.
Captive boards must evolve alongside their organisations. While legal, accounting and compliance expertise remain essential, Eaton argued strongly for robust insurance knowledge at board level. Independent non-executive directors can provide challenge and oversight, but they must also dedicate sufficient time to discussing risk, capacity and long-term strategy. Effective governance requires deliberate planning, skills evaluation and honest assessment of capability gaps.
The anticipated UK captive regime generated significant interest. Approximately half of survey respondents indicated they would be more likely to consider forming a captive under a UK framework. Eaton suggested that an onshore regime could normalise captives, dispelling lingering misconceptions about offshore structures or tax-driven motivations.
He pointed to international precedents, such as developments in France, where regulatory reform has stimulated new formations. A UK regime could offer practical advantages: proximity to headquarters, potential shared services efficiencies, simplified tax arrangements and reduced travel requirements. The mainstreaming of captives, he argued, would benefit the entire risk management community.
Davies echoed this optimism but stressed the importance of proportional regulation. Captives insuring primarily parental risks should not be treated identically to large commercial insurers. If implemented thoughtfully, the regime could attract additional capital to support UK businesses, strengthening economic resilience more broadly.
The discussion concluded on a positive note. Graham observed that relationships between parent companies and captive boards have matured, with greater mutual understanding and shared governance tools. As captives become more embedded in corporate strategy, collaboration across boards, managers and insurers will be essential.
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