Nine Regulatory Priorities UK Insurers Need on Their Radar in 2026–27
The FCA, PRA and HM Treasury have published the December 2025 Regulatory Initiatives Grid, setting out the key areas of reform, supervision and data collection that will shape the UK financial services landscape over the next two years.
For insurers, the Grid highlights a particularly active period. Initiatives span post-Brexit Solvency II reforms, Consumer Duty follow-ups, new stress testing expectations and proposals for a UK captive insurance regime. Together, these developments create an important window for firms to reassess regulatory change planning, governance arrangements and Board-level management information.
This blog summarises the initiatives most relevant to general and life insurers, Lloyd’s market participants and intermediaries such as MGAs and brokers, and highlights the practical implications firms should now be considering.
1. A UK Captive Insurance Regime Takes Shape
A new UK captive insurance regime is in development. HM Treasury will legislate to enable Protected Cell Companies, while the PRA and FCA will jointly consult on the regulatory framework in summer 2026. Implementation is expected by mid-2027.
What firms should consider:
Assessing the feasibility of captive structures for corporate clients ahead of the 2026 consultation, including capital, governance and operational implications.
2. PRA Dynamic General Insurance Stress Test (DyGIST 2026)
The PRA will run a dynamic stress test for general insurers in May 2026, with results published in December 2026. The exercise will test firms’ resilience under adverse scenarios, including liquidity pressures.
What firms should consider:
Readiness for scenario modelling, liquidity metrics and credible recovery actions well in advance of the exercise.
3.Solvency II Reporting and Liquidity Reforms
Following the UK’s Solvency II reforms, two major strands will be implemented:
Solvency II reporting adjustments: Final rules due in Q2 2026, applying to year-end 2026 submissions.
Liquidity reporting requirements: Effective from September 2026 for firms with material liquidity exposures.
What firms should consider:
Ensuring updated templates, controls and governance processes are in place across internal model and standard formula firms.
4. Third-Country Insurance Branch Framework
The PRA will publish final rules in Q2 2026 to raise subsidiarisation thresholds and standardise expectations for third-country insurance branches operating in the UK.
What firms should consider:
Whether delegated authority arrangements, governance structures and branch oversight align with PRA supervisory expectations.
5. Solvent Exit and Resolution Planning
Insurers will be expected to develop credible solvent exit strategies and recovery and resolution plans, aligned to the IAIS Holistic Framework.
What firms should consider:
Embedding solvent exit and resolution planning into governance, capital planning and risk management frameworks.
6. Consumer Duty: Rule Simplification Phase
Following implementation of the Consumer Duty, the FCA will consult in mid-2026 on simplifying overlapping Handbook provisions, including ICOBS and PROD.
What firms should consider:
Demonstrating ongoing monitoring of customer outcomes and readiness for streamlined conduct and product governance rules.
7. SM&CR Reforms
FCA and PRA consultations closed in October 2025. Phase 1 reforms, aimed at simplifying conduct and certification requirements, are expected to be finalised by mid-2026.
What firms should consider:
Adjustments to Senior Manager responsibilities, approval documentation and certification processes.
8. Premium Finance Market Study
The FCA will publish final findings from its premium finance market study in early 2026. Key themes include commission disclosure, value for money and consumer understanding.
What firms should consider:
Reviewing pricing practices, commission arrangements and customer communications where premium finance is offered.
9. Climate Risk and Sustainability Disclosures
The FCA’s Sustainability Disclosure Requirements (SDR) and related Climate Financial Risk Forum guidance continue to evolve, with further updates expected in Q3 2026.
What firms should consider:
Alignment with SDR taxonomy, labelling requirements and anti-greenwashing standards, particularly for insurers involved in investment product manufacture or stewardship.
How Padda Consulting Can Help
The December 2025 Grid underlines the scale of regulatory change insurers will need to manage over the next 18–24 months. Many of these initiatives require early planning, strong governance and clear Board engagement.
Padda Consulting can support firms across key areas, including:
- Regulatory Change Tracking and Board Readiness
- Mapping regulatory timelines to internal delivery plans
- Providing tailored briefings for Boards and Risk Committees
- Consumer Duty and Value Frameworks
- Designing dynamic MI dashboards across products, complaints and commissions
- Aligning Consumer Duty controls with PROD and PRIN outcomes
- Stress Testing, Solvent Exit and Resolution
- Supporting PRA stress test readiness
- Building solvent exit and recovery planning frameworks
If you would like to discuss how these initiatives affect your business, or would like a tailored regulatory update for your Board or leadership team, please get in touch.
