PRA and FCA consult on UK captive insurance regime: Solvency UK and Consumer Duty excluded, 4-6 week authorisation targeted
The PRA and FCA are consulting on a bespoke framework for captive insurers — a first for the UK market. Larger corporates and their advisers should read this one.
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Worth reviewing — larger corporates and their advisers only. Most firms can stop here.
The PRA and FCA have jointly published a consultation (CP11/26, 14 July 2026) proposing the UK's first dedicated regulatory framework for captive insurers. A captive insurer is a wholly or self-owned insurance subsidiary that a business uses to manage its own risks, rather than buying cover from the open market. Until now, any firm wanting to run a UK captive faced the full weight of the standard insurance rulebook. This consultation proposes something materially lighter.
Captives operating under the proposed regime would be excluded from Solvency UK capital requirements and from the FCA's Consumer Duty. Solvency UK is the UK's post-Brexit rewrite of the EU's Solvency II prudential framework; it currently applies to captive insurers in full. Disapplying it is a material concession. Beyond those two carve-outs, the proposals include lower capital and reporting thresholds, a flexible capital framework, and conduct requirements written specifically for captives rather than adapted from the standard insurance rulebook.
The authorisation process is also being redesigned, with a target turnaround of 4 to 6 weeks.
One consumer protection boundary is drawn clearly: captives would be permitted to reinsure, but not directly insure, employee benefits-related policies. That distinction matters if your corporate risk programme includes group life, health, or similar cover.
The initial regime covers single-parent captives only, meaning the captive can insure or reinsure the risks of its parent and other group companies, but nothing beyond that. Protected cell companies, a more complex structure that pools capital across multiple participants, are excluded for now. The regulators say they will consult separately on those once the necessary legislation is in place, though no timeline for that legislation is given.
The consultation closes 14 October 2026. The regime is planned for summer 2027. If this touches your corporate risk programme, respond or flag it to your advisers now rather than at the deadline.
Sources
- PRA and FCA propose new captive insurance regime to drive uk growth and…bankofengland.co.uk
- Solvency iilei24.co.uk
