For years, the UK insurance industry has advocated for a competitive, proportionate captive insurance regime that would allow London to genuinely compete on the global stage. With the release of the PRA and FCA’s consultation paper, the UK finally laid its cards on the table.

As Stephen Cross, CEO of McGill and Partners Europe and Head of Innovation and Strategy, noted: “This is encouraging. The framework shows the PRA has understood what captive owners actually need.”

By introducing proportionate, factor-based capital treatment, setting a sensible 4-to-6-week target for authorisations, and allowing the flexibility to use parental guarantees and letters of credit, the regulators have delivered a strong baseline. By stripping away the complex Solvency II reporting burden and risk margins, the PRA has laid the groundwork for a viable onshore alternative.

The direction is right. However, to turn this potential into reality and truly disrupt the global market, three major pieces of the puzzle still require attention:

1. The Tax Question
The current consultation is understandably silent on the tax regime, as this falls outside the regulators’ remit. However, a captive’s viability is intrinsically linked to its tax treatment. We look forward to greater clarity and detail from HM Treasury and HMRC. To successfully attract both UK corporates and international multinationals, the tax framework must be transparent, competitive, and clearly defined in practice.

2. A Clear Pathway for Redomiciliation
The PRA expects a large number of relocations, yet the consultation lacks technical details on how to actually transfer an overseas captive to a newly authorised UK entity. Redomiciliation isn’t just about UK parents bringing their captives “home.” It is about creating a seamless, frictionless framework for foreign parent companies to move their existing captives to the UK, allowing them to plug directly into London’s unrivalled underwriting and professional services infrastructure.

3. The Global Competitive Landscape  
The London professional services and reinsurance markets are clear winners simply by having this regime exist. But if the UK wants to win the actual domicile battle, it has to look at who is in the line of fire. Guernsey currently holds over 40% of FTSE 100 captives. They have the most to lose, but their established cell company structures give them massive structural resilience. With the UK delaying Protected Cell Companies (PCCs) to a secondary legislative phase, the UK risks fighting with one hand tied behind its back in the short term.

Next steps
We have been advocating for a competitive UK captive regime for some time, and the opportunity to leverage London’s world-class reinsurance and professional services infrastructure directly via an onshore captive is now closer than ever.

While we work with the industry to address these remaining missing pieces, do not wait for the final rules in mid-2027 to start planning. Now is the time to conduct feasibility studies, evaluate your current offshore structures, and model the potential capital efficiencies of a UK domicile.

McGill and Partners is actively helping clients navigate these proposals and will be submitting formal feedback to the regulators before the deadline. Connect with our team today to ensure your voice is heard and your risk strategy is prepared for the new UK landscape.