New ILS regulations will make UK "most competitive reinsurance hub" globally

The risk transfer industry in London including Inga Beale, the chief executive of Lloyd’s, has welcomed new regulations detailed by the UK government designed to ensure the UK captures a share of the market.

The regulations, which the UK government said will “introduce a competitive regulatory and tax regime for Insurance Linked Securities”, will be laid before Parliament after summer recess and will come into force in the autumn of this year.

They set out how to establish special vehicles to issue ILS, the legal framework for ILS, and the associated tax treatment. The regulations also provide for a tailored and proportionate approach to authorisation and supervision.

The UK government said it wants to give the insurance and reinsurance industry greater certainty in how the new regime will work– enabling them to be on the front foot in preparing for the new rules when they come into force in autumn.

Stephen Barclay, economic secretary to the Treasury, said: “This new bespoke regime for insurance linked securities will ensure the UK remains the most competitive insurance and reinsurance hub in the world.

“This global business is evolving rapidly and we are determined to make sure we’re part of this evolution.”
Malcolm Newman, chairman of the London Market Group’s ILS Taskforce, added: “The new ILS framework offers a very exciting future for the London Market to continue to deliver innovative new products that make a real difference. I am proud that the LMG has helped lead the development of these proposals.

“We believe there is a real appetite in the London Market to invest in ILS products which will bring investors to the UK and make a significant contribution to growing the UK’s trade.”

Beale added: “We have seen growth in ILS capital, especially in global reinsurance, over recent years and there is no doubt that London has the talent and expertise that should make it a natural destination for consumers in this market.

"The London Market Group have worked alongside the Government to ensure these regulations will help London in this growing market and underline its global position at the heart of specialist insurance and reinsurance."

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