The Financial Conduct Authority is broadening its planned intervention in the home and travel insurance markets, responding to a super-complaint lodged by the consumer group Which? and signalling a tougher year ahead for firms whose claims processes and product communications fall short of regulatory expectations.
In a statement published earlier today, the regulator said it would expand work already under way to lift standards in the two lines of business. While the FCA noted that a majority of claimants report a satisfactory experience, it said its own evidence points to persistent weaknesses in how policies are explained and how claims are handled, particularly where consumers struggle to compare cover and understand exclusions at the point of sale.
The watchdog’s next phase will concentrate on two themes that have become familiar pressure points under the Consumer Duty: the operational reality of claims handling and the clarity of pre- and point-of-sale information. Over the coming year, the FCA said it will review firms’ customer service and delivery in claims, including the governance and oversight applied to outsourced and third-party claims handlers. Alongside that, it plans to examine the ways insurers and intermediaries are selling home and travel products, with the aim of improving consumer understanding of what cover does—and does not—include.
The FCA framed the programme as an acceleration rather than a pivot. It said the market has already begun to respond to previous calls for better customer information, and that findings from the forthcoming reviews will be used to engage with insurers, trade bodies and consumer groups to improve decision-making at purchase. For insurance professionals, that points to more detailed supervisory expectations around product literature, sales journeys, call scripts, digital disclosures, and the controls that sit behind delegated claims arrangements.
Regulatory teeth were also on display. The FCA listed steps taken since a July review of home and travel insurers, including two enforcement cases, a restriction preventing one firm from growing its business until identified issues are fixed, three independent reviews into systems and controls, and remedial commitments from three senior managers—including consideration of whether redress may be due. The regulator added that it will continue to act where it has concerns and stressed that it will use the “best tools” for rapid consumer impact, rather than relying solely on lengthy market studies or enforcement.
Graeme Reynolds, the FCA’s director of competition and interim director of insurance, said: “We welcome Which? shining a light on issues we identified in home and travel insurance.
“We’ve set out more detail on the action we’ve already taken to fix problems, and we’re expanding our existing workplan to improve the claims process and consumer understanding of their cover.
“We’ll be monitoring consumer outcomes and will continue to hold firms and their senior leaders to account for making improvements, to help build trust and make sure people get fair value insurance.”
Which?’s super-complaint—an uncommon mechanism designed to trigger regulatory intervention where a market appears to be causing widespread consumer harm—has put claims friction and perceived unfairness back on the agenda. The consumer body has argued that some policyholders experience the claims process as an additional shock after the underlying event, and it has criticised both industry practices and the regulator’s approach.
For insurers and intermediaries, the FCA’s renewed focus suggests near-term scrutiny on three fronts.
First, claims operations: complaints drivers, claims outcomes, customer communication, service standards, and the effectiveness of oversight where specialist third parties are used. Second, product communications: the adequacy of information that enables customers to assess policy quality, value and suitability, particularly in a market shaped by price competition and comparison-site journeys. Third, senior accountability: the regulator has made plain that it expects leaders to own, fund and deliver improvements, and that it is prepared to use supervisory and enforcement tools where progress is insufficient.
The coming year is therefore likely to test how well firms can evidence that their claims performance, distribution arrangements and customer-facing materials deliver fair value and understandable cover—not merely in policy wording, but in the lived experience of customers when they need to claim.
