Britain is setting its sights on attracting a great share of the captive insurance market — in which Bermuda is a leading player.

The Bank of England announced today that financial regulators Prudential Regulation Authority and the Financial Conduct Authority have jointly proposed the new captive regime, which is designed to make Britain more competitive and attractive as a captive jurisdiction.

The statement said the new rules would “support economic growth, leverage the UK market's expertise and cement its position as the location of choice for global insurance and reinsurance”.

A captive insurer is an insurance company owned by a business to insure some of its own risks, reducing its dependence on commercial insurers.

The consultation on the proposed new rules closes on October 14, 2026, with the aim of launching the regime in summer 2027, after considering respondent feedback, the Bank of England statement said.

The declaration of intent from London comes amid efforts by regulators to also attract more insurance-linked securities business, another area in which Bermuda is a world leader.

By streamlining and speeding up applications and approvals for financial vehicles used to issue catastrophe bonds, it hopes to attract more of the ILS business now flowing elsewhere. The Bermuda Stock Exchange is where about 90 per cent of ILS listings take place.

The proposals are described as “tailored and proportionate to the specific nature of captive insurance”.

Key features include:

• A streamlined PRA/FCA authorisation process with a target of four to six weeks

• Excluding captives from Solvency UK and Consumer Duty requirements

• Lower capital and reporting requirements

• A flexible capital resources framework

• Dedicated PRA supervisory resource

• Specifically tailored FCA conduct requirements including proportionate supervision and reporting.

The statement added: “The framework includes appropriate safeguards. For example, to protect individuals, captives would be able to reinsure, but not insure directly, employee benefits-related policies.”

The most recent statistics from the Bermuda Monetary Authority showed the island was home to 626 registered captive insurers — including general business captives, long-term captives, and special-purpose captive classes — which wrote approximately $31 billion in gross premiums in 2023.

The captive sector supports hundreds of jobs across insurance management, legal, and accounting firms. The first captive insurer was incorporated on the island in 1962 and it remains one of the world’s largest captive domiciles, alongside competitors such as Vermont and the Cayman Islands.

David Bailey, executive director for prudential policy at the PRA, said: “This bespoke regime for captives will enhance the UK’s competitive edge in insurance. Ahead of the formal launch in 2027, we are keen to speak to any businesses that could benefit from establishing a UK-based captive.”

Sarah Pritchard, deputy chief executive of the FCA, said: “A competitive captive insurance option in the UK could benefit UK companies and support wider economic growth. Our approach is pragmatic and proportionate, with appropriate safeguards in place.”