Marsh stresses benefits of potential UK captive changes

The UK Government has concluded its consultation period on captive insurance in the UK, with final submissions being made on Friday February 7.

No announcement has yet been made on the next steps, but the UK Government will now take the various submissions into consideration as it makes a decision.

Commenting on the conclusion of the consultation, Chris Lay (pictured), chief executive of Marsh McLennan UK said: “The establishment of an effective, modern and efficient captive insurance regime could help accelerate the growth of the UK insurance market and continue to make it competitive on the international stage.

“However, in order to achieve this, any new framework must be built with appropriate and proportionate regulation and capital requirements. If a new UK regime is to compete with other established domiciles, and new emerging locations, it needs to offer the flexibility, scope, and speed of licensing to provide an internationally competitive alternative for captive owners and prospective owners.”

Marsh McLennan’s own submission to the consultation process said that it believes that the introduction of a captive framework could help the UK reinforce its position as a centre for insurance excellence.

The implementation of captive-specific rules could make the UK a more attractive base for companies and support the development of a more holistic insurance market.

Further, as it develops, the captive sector could serve to increase innovation and the competitive nature of the UK.

To achieve this and ensure a competitive framework, Marsh McLennan believes that the UK needs to offer:

• A speedy and efficient application process

• Capital and reporting requirements which are fair, proportionate and reflective of the low-risk nature of captives

• Costs which are competitive but allow for sufficient resources to support effective regulation and oversight

• Regulation which is scaled to ensure it is fit and proper for the captive market

• Sufficient flexibility to allow the UK captive market to develop and expand

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