A review of the extant literature of enterprise risk management (ERM) and capital allocation shows that insurers have an incentive to manage capital costs through risk management. They deploy capital by holding a large number of financial risk positions that need to be evaluated. ERM can help insurers to create and improve shareholder value through better risk-based decision making and capital allocation. This study aims to develop a theoretical framework that helps in understanding risk management practice associated with ERM implementation. Mainly, this framework draws on structuration theory (Giddens, 1979, 1984) and institutional theory, particularly the institutional framework of Burns and Scapens (2000), as well as ‘new’ institutional sociology theory. This framework is used in this research as a theoretical base to investigate the link between the motives for ERM adoption and ERM use within insurance companies, the relation between ERM determinants and its use, as well as to provide empirical evidence of capital allocation change process driven by ERM in insurance companies’ context. A field study is conducted for the purpose of this research. Six listed large or medium-sized general insurance companies based in London were purposively chosen for this research. The adoption decision of ERM was mainly driven by coercive, internal and normative pressures rather than mimetic ones. The presence of the chief risk officer (CRO) and CEO and CFO support for ERM in insurance industries are shown to be the main determents for ERM implementation. In addition, ERM drives changes in various risk management practices such as capital allocation, underwriting and actuarial.