The British Government plans to develop a corporate and taxation structure to attract insurance-linked securities (ILS) business to the country.

“This alternative form of reinsurance makes greater use of capital markets and is a key growth opportunity for the sector,” last week’s budget papers say.

The Government will work with industry and regulators to develop a competitive structure to allow ILS – also known as catastrophe bonds – to be domiciled in the UK, building on the country’s position “as a world leader in the global insurance market”.

About $US25 billion ($32.49 billion) of ILS are on issue, and 60% of them were issued from Bermuda, followed by the Cayman Islands with 30% and Ireland with 10%.

Bermuda issued 95% of new bonds in the last quarter of last year.