In a statement released on social media in the wake of the Chancellor’s first Mansion House address, the business leader said he was pleased Rachel Reeves had singled out insurance and reinsurance as one of her five priority growth sectors for the UK economy and that the power of the insurance industry from a financial point of view, was the “unthanked sister of finance,” despite contributing nearly a third of the City of London’s GDP.

“With £30 trillion in assets under management globally, the insurance industry holds the key to catalysing the energy transition,” Howden said. “Our whitepaper released last week at COP 29 with Boston Consulting Group (BCG) and the High-Level Climate Champions, shows how insurance can unlock finance at the speed and scale so urgently required. With insurance firing on all cylinders, we’ll help get growth motoring for the whole economy and maybe, at long last, give our sector the recognition it deserves.”

He went on to say that the sector’s vital role spans climate resilience, cyber protection, real estate development, and renewable energy investment, and by unlocking opportunities for businesses to grow, insurance plays a transformative role in supporting economies worldwide. 

“The Chancellor’s proposals to bring captives into the fold are certainly a welcome move, though any ultimate captive legislation in the UK will need to address competitiveness with offshore domiciles in respect to solvency and length of time to license an entity. The proposed regulatory overhaul is also perhaps overdue. Of course, it’s far from a panacea.”

He continued: “What we really need is greater innovation in the market so that clients have the confidence to come to us for the coverage they need. On that front it was certainly encouraging to hear about plans to improve the UK market for insurance linked securities. Sadly, the UK market has lost significant ground to other global competitors in recent decades. We must make sure clients are always the central focus in everything we do. Nowhere is this more apparent than in the transition to net zero.”

Untapped potential of ‘Captive Insurance’

Howden also pointed out that a focal point of the Chanceller’s remarks was the potential of captive insurance. Trillions of dollars lie dormant on corporate balance sheets, earmarked for potential risks that never materialise. He said that by leveraging captives—insurance entities formed by companies to manage their own risks—businesses could free up this capital for productive use. However, for the UK to compete with offshore domiciles, any new captive legislation must address solvency requirements and licensing efficiency.

“It was even better to hear her pick up on a theme mentioned in that earlier summer summit: captive insurance. There are potentially trillions of dollars sitting untouched on company balance sheets. Money put aside for a rainy day that never sees the light. What a waste! Firms can take that risk off their balance sheets if only they were given the opportunity and the right insurance products.”

During her speech, the Chancellor also announced plans to revamp the UK’s regulatory framework for insurance-linked securities (ILS), an overdue move to regain lost ground in this innovative market segment. Industry leaders believe such measures could spur greater confidence and innovation, ensuring clients’ needs remain at the forefront.

Howden concluded: “Despite its somewhat unglamorous reputation, our sector is a tremendous force for good – from climate resilience to cyber…real estate to renewables. We unlock the opportunity to allow great companies to grow.”

Reporting by Joanna England