More work to be done to promote UK captives, says financial services minister
Captive insurance regulation in the UK is “ripe for further work” to promote further growth, the country’s financial services minister John Glen told the House of Lords committee review of commercial insurance and reinsurance regulation.
Trumpeting the London market as the world’s largest reinsurance hub, Glen praised the existing regulatory regime. “It’s a massive industry. I think the core strength of our regulatory regime is the high standards of regulation, globally recognised.”
However, he said that, following Brexit, the next Parliamentary session would see a new UK regulatory framework that would “fundamentally rebase the way regulatory activity continues”.
A consultation on insurance reform would come after Easter, he promised.
In response to complaints about caution in applying rules to allow new types of business such as captives and insurance linked securities, however, Glenn denied a cultural problem among the regulators. He said he had a “high regard” for the leadership of the Prudential Regulation Authority and Financial Conduct Authority.
The Risk Transformation Regulations in 2017 had introduced a tax-efficient framework in the UK for ILS, even if use had been limited, he acknowledged. As for captives, he admitted the UK lacked a “bespoke regulatory legal framework for hosting outside of Lloyds”, which saw captives domiciling elsewhere.
“I think that’s something that the PRA is very aware of, and that’s something where it’s right for further work to be done,” he told the committee. “I would hope that we would see that evolution in the way that insurance and reinsurance is offered to big corporates and …find appropriate ways of developing that market in the UK.”