On June 23, 2016, the UK voted in a referendum to leave the European Union and will face the question of whether to join the European Economic Area and whether its financial services sector will continue to enjoy "passporting rights", which will create uncertainty for the development of the UK's captive insurance business.

Under EU agreements, "passporting rights" allow financial enterprises registered in the EU, including captive insurers, to automatically obtain the right to directly conduct banking, insurance and other related financial business in its member states.

The captive industry relies on the support of the global reinsurance industry. London and Lloyd's are the world's largest insurance centre, reinsurance centre and specialty risk centre, and many EU captive insurers are connected to the London insurance market through fronting companies or reinsurers. If the UK loses its "passporting rights", many captives registered in British territories that wish to do business in the EU will need to reapply for the relevant insurance business qualifications or choose a fronting company locally, which will increase their business costs. British Crown dependencies such as Guernsey, Jersey and the Isle of Man will all be affected, with Gibraltar the hardest hit: the insurance industry accounts for a large share of its economic output and a significant share of the UK motor insurance market. Other European captive domiciles such as Dublin and Malta, by contrast, may benefit from this.

Reuters reported that the Lord Mayor of the City of London, Jeffrey Mountevans, said: "The UK must maintain its 'passporting rights' after Brexit to safeguard access to the EU single market. If the UK cannot retain its 'passporting rights', the British financial industry will be shut out of the European market."