The potential introduction of a UK captive regime would bring the risk financing tool further into the mainstream and may potentially mean more companies, rather than less, will look to utilise neighbouring domiciles such as Guernsey.
Captive Intelligence reported in November last year that the UK government will launch a consultation on the design of a new captive framework in spring 2024, with the aim of “encouraging the establishment and growth of captives” in the United Kingdom.
Rather than any potential competition between Guernsey and the UK, Mark Elliott, CEO at Guernsey-based Marco Re and a board member of the Guernsey International Insurance Association (GIIA), said it was more about “growing the size of the captive pie for everybody, I think, and we’re very supportive of the UK’s ambition in that regard”.
William Lewis, UK insurance representative for Guernsey Finance, said captives are becoming more commonplace and this should be beneficial to the whole sector.
“For companies that were reticent about a captive previously are suddenly finding themselves realising that other companies are setting up captives and protected cell companies (PCCs), so ‘why shouldn’t we?’” he said. “I think this is going to be good news.”
Elliott said a UK captive regime would help bring captives into the mainstream even more than they currently are.
“As we’ve seen Italy, France, and hopefully the UK in the near future, introduce captive regimes, then we’ll have more companies looking to utilise captive structures, either in the UK or in the existing established jurisdictions,” he added.
While London’s leading position as a global insurance hub and the expertise already in place will be the unique selling proposition of a UK captive domicile, regulatory understanding and responsiveness will be the ultimate factor as to whether it succeeds or not.
Elliott said a UK regime would offer more choice and more options for buyers, “which is a good thing for everybody”.
He also believes there will be pros and cons of the UK as a jurisdiction alongside all the other domiciles.
“That’d be up to clients to decide, but generally, I think we see it as a positive development,” he said.