UK Law and Practice Contributed by: Clare Swirski, E. Drew Dutton, Hugo Laing and Rosamund Wood, Debevoise & Plimpton LLP
Brexit The transitional period ended on 31 December 2020. Although a trade agreement was agreed between the UK and the EU, it contained very few provisions on (re) insurance, and the UK is now treated as a third coun- try (resulting in a loss of passporting rights between the UK and the rest of the EU). The UK and the EU agreed a memorandum of understanding (MoU) on a framework for co-operation between financial regula- tors in June 2023. The MoU highlighted financial sta- bility, market integrity and the protection of investors and consumers as common objectives, and provided for exchanges of views, information and analysis, transparency, dialogue and enhanced co-operation and co-ordination between the regulatory bodies in each jurisdiction. The UK granted a package of equivalence decisions to the EU and EEA member states, including for the three equivalence areas under Solvency II, reinsur- ance, group solvency calculation and group supervi- sion. The EU has not reciprocated, so the UK has not been granted equivalence under Solvency II. Prior to the end of the transitional period, EU laws and regulations, including those relating to (re)insur- ance, and in particular Solvency II, were implemented directly into UK law, but without the references to EU institutions and the reciprocal arrangements linked to being a member. Post-Brexit, the UK government sought to make the UK insurance industry internationally competitive, in part through its relaxation of the Solvency II regime’s application in the UK and certain branch require- ments. Additionally, pursuant to the FSMA 2023, the UK regulators now also have a secondary objective: to facilitate economic growth and international com- petitiveness.
Notwithstanding the UK’s Solvency UK reforms, nei- ther regulators nor the industry have shown any desire to diverge greatly from Solvency II, given the amount of effort, time and money spent on its implementation, and the reforms seen from HM Treasury and the UK regulators in recent years seem to follow this expec- tation. Insurance-Linked Securities Regime The UK ILS regime was implemented after a signifi- cant amount of work among the regulators, the indus- try and HM Treasury to design an onshore regime that would allow the UK to compete with more established ILS jurisdictions, whilst ensuring that ILS issued in the UK would be compliant with Solvency II. The rules introduced protected cell companies in the UK for the first time, together with an attractive tax regime and a bespoke approach to regulation and supervision to reflect the nature of ILS transactions. The transfer of certain types of bonds issued under the ILS regime is exempted from stamp duty and stamp duty reserve tax. Lloyd’s has had some success with the ILS regime through the London Bridge structure, which uses a protected cell company structure to introduce new capital into the Lloyd’s market. To date, it has proven to be successful, with over GBP2.2 billion of new capi- tal entering the market via the vehicle in 2025. As mentioned in 7.1 (ART Transactions) , in July 2025, the PRA finalised reforms to the UK ISPV regime, to enhance competitiveness of the UK’s on-shore ILS market while maintaining prudential safeguards. In its September 2025 speech, the PRA also stated it was planning to publish a discussion paper on the topic of alternative life capital options, which will consider how the ISPV framework (or other structures) could be made accessible to UK life insurers.
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