
London considers fresh horizons for captives
As the UK Government’s consultation period on embracing captives draws to a close, what might result from it? Captive International talks to Mark Rogers of Vitesse.
The UK’s recent consultation on captives, announced by Chancellor Rachel Reeves in November 2024, has sparked considerable debate across the industry. Captives have seen increasing adoption globally.
Despite London's historical dominance in the insurance market, the UK has been slower to embrace captives compared to jurisdictions such as Bermuda, the Cayman Islands, Guernsey, Luxembourg, Ireland and Vermont, to name a few.
Mark Rogers, vice president at Vitesse, explained the context for the consultation: "The consultation really resonated with us because it aligns with our mission to streamline financial operations and enhance governance in the insurance ecosystem. As a partner to captives, Vitesse plays a crucial role in managing liquidity flows and ensuring fast payments worldwide coupled with strict control of regulated claim funds.”
However, the short consultation period – ending on February 7 – has raised concerns. For it to be meaningful, has it had sufficient time to consider people's views, especially given the complexity of the market and the Christmas shutdown falling between the announcement and the deadline?
Rogers echoed these sentiments, noting the difficulty in capturing the perspectives of all market participants within such a tight timeframe.
The role of Vitesse in the market
Vitesse has been pivotal in providing solutions for cash management and payment flows within the insurance sector. Reflecting on the company’s journey, Rogers shared: "We were established more than 10 years ago as a generalist cross-border payment services provider and quickly moved to a sole focus on the insurance vertical, given the very specific needs of the players within that space.
“Over the years, we’ve grown our insurance expertise, especially within the Lloyd’s market, to ensure claim funds are held more efficiently and compliantly. This ensures carriers retain oversight of their funds rather than losing control when transferring them to third parties."
Vitesse’s success in Lloyd’s has, naturally, expanded its footprint into the captives market. As Rogers noted: “The more time we’ve spent in the market, speaking with stakeholders and understanding the challenges, the more we’ve seen opportunities to deliver solutions that improve fund management and enhance the insured’s experience.”
The regulatory landscape and market evolution
One key area of focus for the consultation is the regulatory framework for captives. Current regulations often involve significant capital requirements, complex compliance processes and high costs. Rogers explained how Vitesse is addressing these challenges: "We’ve developed solutions that accelerate the process of operationalising captives, while still maintaining full due diligence and regulatory compliance. By providing clear transparency and better control of funds, we make it easier for new entrants to participate in the market."
However, the consultation also raises broader questions about the balance between fostering market growth and protecting established interests. Rogers commented: "There’s a lot of investment from territories like Bermuda, Guernsey and Vermont in retaining their dominance. A relaxation of captive regulations in the UK could open the market, but it may also affect these established hubs."
This tension underscores the importance of crafting regulations that not only encourage growth but also maintain fair competition and high standards across jurisdictions.
The UK’s position in the global captive market
The UK’s historical reluctance to take the lead in captives is a point of interest. Despite London’s reputation as a global hub for specialty and complex risks, captives have been a missed opportunity.
Rogers highlighted London’s established strengths: "The London market has always been a cornerstone of UK financial services. But as captives grew in popularity, particularly among companies disproportionately disadvantaged by traditional premiums, the UK market was perhaps slower to adapt. Now, with a captive-focused regulatory environment, the UK has an opportunity to realign and take a leading role."
Global competition and the need for adaptation
The growing competition from the US is also shaping the conversation. States such as Vermont and Tennessee have made significant investments in attracting captive business, creating a robust regulatory environment and promoting innovation. Rogers noted: "The challenge for the UK is to ensure it remains an attractive market. If we get the regulatory approach wrong, there’s a risk that business will be attracted to markets that offer more accessible solutions."
This competitive dynamic is particularly pressing in the light of recent catastrophic events, such as wildfires in California. These tragedies have tested the resilience of insurers and highlighted the importance of timely claims payouts. As Rogers observed: "The London market has been incredibly focused on ensuring that claims are paid efficiently. Working with clients over the past few weeks on wildfire claims, I’ve seen how critical it is to have funding in place to help individuals rebuild their lives."
The path forward
The consultation’s outcome will likely shape the future of captives in the UK for years to come. Rogers expressed cautious optimism: "I think we’ll see adjustments to regulations that will remove some of the existing barriers to establishing a captive in the UK; what will be interesting is whether this is limited to reinsurance or whether it also addresses direct-writing. Transparency and control will remain paramount, but we need to ensure the system is accessible to new entrants and supports market growth."
However, he also acknowledged the challenges of aligning industry desires with regulatory realities, pointing out that there’s a risk that established voices in the market, which benefit from the status quo, may resist changes that could ultimately limit their growth.
As the UK seeks to position itself as a leader in captives, collaboration between regulators, industry participants and innovators such as Vitesse will be essential. The consultation provides a valuable opportunity to address longstanding challenges and set the stage for growth. However, for it to be meaningful, as many voices as possible must be heard and the resulting framework should truly meet the needs of the market.
Whether the UK seizes this opportunity or cedes ground to other markets remains to be seen. What is clear, however, is that the captives market is poised for continued expansion and the UK must adapt to remain competitive.
Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.