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Today, the Prudential Regulation Authority published its business plan for 2026\/27 and highlighted continued development of its insurance-linked securities (ILS) and alternative reinsurance capital frameworks.<\/p>\nThe Prudential Regulation Authority (PRA) of the Bank of England has confirmed that it will continue to work with the HM Treasury on further reforms to enhance insurance-linked securities (ILS) and catastrophe bond frameworks in the United Kingdom in order to amplify competitiveness within the market.Today, the Prudential Regulation Authority published its business plan for 2026\/27 and highlighted continued development of its insurance-linked securities (ILS) and alternative reinsurance capital frameworks.<\/p>\n
In November 2024,<\/a> we reported that the UK\u2019s Prudential Regulation Authority was consulting on reforms to approval timelines for the insurance special purpose vehicle (ISPV) regulatory regime, which includes an accelerated pathway for certain catastrophe bond applications and a 10-day target for approvals of certain ILS arrangements.<\/p>\n Then,\u00a0in July 2025,<\/a>\u00a0in its published consultation, the UK Government confirmed that the PRA will from 2026 begin reporting on ISPV approval timelines.<\/p>\n Around the same time, the PRA finalised policy changes to the UK framework for ISPVs, aiming to facilitate a broader spectrum of existing global market practices within the UK. These changes are designed to simplify and expedite the application and approval processes, while also clarifying the PRA\u2019s expectations for UK insurers that transfer risks to ISPVs, regardless of their location.<\/p>\n In its announcement today, the Prudential Regulation Authority (PRA), said: \u201cDuring 2026\/27, the PRA will continue to work with HMT on further reforms to ensure that the regulatory and legislative frameworks are aligned to support an internationally competitive sector while advancing the PRA\u2019s objectives.\u201d<\/p>\n Meanwhile, in November 2025,<\/a> the Prudential Regulation Authority also published a discussion paper to gather feedback on how the UK\u2019s ISPV or ILS structures can play a role towards bringing in alternative capital to support life risks and reinsurance throughout the UK market.<\/p>\n This didn\u2019t come as a surprise as the PRA had indicated a while before that the discussion paper was coming, as during her speech at the 30th Annual Bank of America Financials CEO Conference in London\u00a0Vicky White of the PRA, had highlighted how the regulator will work with industry and HMT on identifying alternative capital options which will consider how the ISPV framework (or other structures) could be made more accessible to UK life insurers<\/a><\/p>\n These forms of alternative capital options includes both sidecars and catastrophe bonds.<\/p>\n The PRA confirmed that the discussion paper closed in early February, and going forward it will now seek to identify any potential changes to the existing insurance regulatory framework to facilitate and attract new forms of capital while maintaining strong protection for policyholders.<\/p>\n \u201cOver the coming year, we will engage with industry and other stakeholders as we progress our objectives and deliver our strategic priorities. This engagement will include working closely with HM Treasury on reforms to the ring-fencing regime, supporting meaningful reform while maintaining an effective ring-fence,\u201d the PRA said in its statement.<\/p>\n \u201cWe are currently considering responses to our discussion paper on broadening UK life insurers\u2019 access to alternative capital, with the aim of enabling new sources of capital that support economic growth while safeguarding policyholder protection. We are also working with the FCA to develop a proportionate authorisation process and a new regulatory framework for captive insurers, and to implement reforms to the Senior Managers and Certification Regime to reduce costs for banks and insurers without diluting accountability.\u201d<\/p>\n Sam Woods, Deputy Governor, Prudential Regulation, Chief Executive of the PRA, commented: \u201cOver the coming year, we will engage with industry and other stakeholders as we progress our objectives and deliver our strategic priorities. This engagement will include working closely with HM Treasury on reforms to the ring-fencing regime, supporting meaningful reform while maintaining an effective ring-fence.<\/p>\n \u201cWe are currently considering responses to our discussion paper on broadening UK life insurers\u2019 access to alternative capital, with the aim of enabling new sources of capital that support economic growth while safeguarding policyholder protection. We are also working with the FCA to develop a proportionate authorisation process and a new regulatory framework for captive insurers, and to implement reforms to the Senior Managers and Certification Regime to reduce costs for banks and insurers without diluting accountability.\u201d<\/p>\n Also read:\u00a0<\/p>\n \u2013 PRA seeks feedback on potential for UK life ILS, including cat bonds and sidecars<\/a><\/p>\n \u2013\u00a0UK reforms enable \u201cmuch faster turn-around time\u201d of ISPV approvals: PRA<\/a>.<\/p>\n \u2013\u00a0UK Gov confirms new cat bond, ISPV timelines. Launches new consultation to enhance ILS regime<\/a>.<\/p>\n \u2013\u00a0UK ILS reforms more likely to take activity from other jurisdictions than generate net-new: Fitch<\/a>.<\/p>\n \u2013\u00a0Bank of England to explore potential for UK ILS iSPV structure in life risks and FundedRe<\/a><\/p>\n
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