

Final call: proposed changes to the UK’s Insurance Special Purpose Vehicles regime
The UK’s Prudential Regulation Authority (the PRA) is consulting on proposed changes to the UK Insurance Special Purpose Vehicles (UK ISPV) regulatory framework.
As a brief recap, insurance special purpose vehicles (ISPVs) are typically used to effect alternative risk transfer, by converting insurance risk into capital markets risk. This is done by (re)insurers ceding (re)insurance risk to ISPVs, which in turn securitise that risk by issuing insurance linked securities (ILS) into the capital markets.
The UK ISPV regime was established in 2017 but has had limited uptake. The current regime does not make the UK an attractive ISPV jurisdiction.
The main proposals are:
- Structural changes to the UK ISPV regime
- Process changes to the authorisation process and use of UK ISPVs
- Changes to expectations of (re)insurers ceding to ISPVs
- Changes to the Senior Managers and Certification Regime (SM&CR) for UK ISPVs
The Consultation is not a surprise given the Government’s focus on UK economic growth in the (re)insurance sector, and the PRA’s (relatively) new secondary objective of international competition.
As in the case of the UK consultation on captives insurance (see our article here) this is a competitive field where many other jurisdictions already offer an ISPV regime. The proposed reforms are very welcome; hopefully the PRA will be able to balance its regulatory objectives with making the UK a competitive ISPV jurisdiction.Â
The consultation closes on Friday 14 February 2025, with implementation targeted for mid-2025.
