Prime Minister Rishi Sunak’s cabinet reshuffle has moved a key advocate of a UK captive proposition out of the Treasury, with the market now waiting to see whether the new City Minister, Bim Afolami MP, will progress the initiative before the end of this government.
Andrew Griffith MP hosted a roundtable meeting organised by London Market Group in September, to discuss the feasibility of establishing a new captive regime in the United Kingdom.
Griffith had intended to establish a working group that would develop secondary legislation, ultimately introducing a new class of ‘captive insurer’ schedule to the Regulated Activities Order, that would not be regulated under Solvency II or the proposed replacement, Solvency UK.
On Monday evening, however, Griffith was appointed Minister of State for Science, Technology and Innovation, vacating his role as City Minister.
The LMG is hopeful that Afolami, a former corporate lawyer and banker, is sympathetic to its various initiatives, including the captive project, and know him well from his leadership of the Regulatory Reform Group (RRG).
“Andrew Griffith was incredibly supportive of specialty insurance as an industry and of the LMG’s proposals to grow a UK captives market,” Caroline Wagstaff, CEO of LMG, told Captive Intelligence.
“He has laid some very solid foundations and our thanks go to him for this work. The LMG will be continuing to work with the Treasury and PRA to explore how this can be taken forward under the direction of the new City Minister, Bim Afolami.
“We look forward to working with him to deliver on this ambition, and on other matters which will solidify the London Market’s position as a world leader in risk transfer.”
Captive Intelligence released a podcast in October, featuring Wagstaff and Aon’s Charles Winter discussing what a UK captive regime might look like and its potential for success.
“The key starting point is really a regulator that understands that a captive is not a commercial insurance company,” Winter said in October.
“Once you have that everything else sort of flows with it, that you don’t have the systemic issues, you don’t have the same consumer protection issues. What that boils down to is the word we’ve mentioned already, and I’m sure we’ll mention again, ‘proportionality’.”
Julia Graham, CEO of Airmic, the UK’s risk and insurance management association, has said the UK could offer a “unique proposition” for captives if a “proportionate and fit-for-purpose” regulatory environment is developed with long term commitment from the government.