Bank of England says UK's new captive insurance regime must be 'transparent and cost-effective' as it draws up long-awaited regulations for the sector

The Bank of England (acting through the Prudential Regulation Authority, or PRA) has acknowledged publicly that the success of Britain's new captive insurance regime will depend on it being transparent and cost-effective, as it continues to develop regulations for the emerging sector. A captive insurance arrangement is one in which a company sets up its own regulated insurance entity — typically in a separate jurisdiction — to cover risks that are either too expensive or too difficult to place in the commercial insurance market. The Bank's statement, made on Tuesday, signals a regulatory posture of proportionality as the UK works to position itself as a competitive jurisdiction for captive structures following Brexit. The UK's captive insurance regime is intended to allow large corporates to self-insure more efficiently under a domestic regulatory framework, rather than routing such arrangements through traditional offshore captive domiciles such as Bermuda, Guernsey, or the Cayman Islands. The PRA's emphasis on cost-effectiveness and transparency indicates that the regulator is aware of the risk that an overly burdensome application and ongoing compliance process could undermine the commercial case for onshoring captives to the UK. The regime is described as "long-awaited" — reflecting significant industry lobbying for a UK captive framework — and the regulations are still being developed.