W Denis and the London Market Group (LMG) have welcomed the Government\u2019s pledge to launch a consultation next year into designing a new framework to help establish captive insurance companies in the UK. The commitment was included in Chancellor Jeremy Hunt’s Autumn Statement, which stated: “The government will consult on the design of a new framework for encouraging the establishment and growth of captive insurance companies in the UK. The consultation will launch in spring 2024.”<\/p>\n\n\n\n
The LMG, which brings together the specialist commercial (re)insurance broking and underwriting communities in London, has been encouraged by the commitment to launch a consultation having spent over a year campaigning for UK watchdogs to ease the regulatory and administrative burden associated with setting up captives.<\/p>\n\n\n\n
Captive insurance companies are insurance companies created and wholly owned by non-insurance groups to underwrite risks of the group and can be a cost-effective means of obtaining insurance. In the last 30 years there has been significant growth in the captive market and, potentially, they can offer significant tax advantages. A wide range of companies, not-for-profit organisations and government agencies worldwide rely on captives as part of their strategy for managing risk.<\/p>\n\n\n\n
Caroline Wagstaff, the LMG CEO, said: “The London Market Group is delighted by the announcement by the Treasury that it will consult on the creation of a UK captive regime by spring next year, taking on board the recommendations within our Plan for the Future. “As the global centre for risk transfer, London needs to be able to offer all the tools in the toolkit, so this is a great step forward. We look forward to working closely with the government and regulators to ensure the UK remains a highly competitive insurance centre.”<\/p>\n\n\n\n
The LMG’s efforts began last year with the publication of a white paper that outlined the size of the captive insurance market and the scope of the opportunity for the City. In the white paper, the LMG estimated there are around 7,000 captives worldwide generating approximately \u00a355 billion ($69bn) in premium.<\/p>\n\n\n\n