The Financial Conduct Authority (FCA) has set out its agenda for insurers in a new “Regulatory Priorities: Insurance” report for 2026, replacing the previous portfolio-letter approach and signalling a shift towards outcomes-based supervision anchored in the Consumer Duty.
The insurance report is the first of nine annual sector “Regulatory Priorities” documents that will also cover areas such as consumer investments, pensions, retail banking, mortgages and payments. The FCA said the new format is intended to give firms a clearer and more consistent view of its expectations, with high-level summaries of priorities and links to more detailed material updated on an annual cycle.
Four pillars for insurance supervision
For insurance, the regulator highlighted four overarching priorities - improving consumer understanding, claims handling and service quality; increasing access to insurance, particularly for vulnerable or higher-risk customers; supporting growth and innovation, including the responsible use of artificial intelligence; and simplifying regulation while maintaining high conduct standards.
The FCA also pointed to ongoing work on embedding the Consumer Duty, including market studies on pure protection and premium finance and further multi‑firm reviews of claims handling, products and services, and outcomes monitoring. Rather than expanding prescriptive rules, the regulator is signalling that it will increasingly judge firms on the results they deliver for customers, especially in relation to fair value, pricing practices and how well products are understood.
‘Permanent shift’ in FCA supervision
Following publication of the insurance report, strategic regulatory consultancy Sicsic Advisory said the document confirms a structural shift in supervisory approach, with insurance again at the forefront of regulatory scrutiny.
“This consolidated roadmap confirms a permanent shift in the FCA's supervisory strategy. Insurance is the sector that was under the most scrutiny over the last few years, the sector where the FCA is pushing the new supervision approach first so no surprise this report was published first,” said managing partner Michael Sicsic (pictured).
He added that the move to a streamlined set of priorities should not be interpreted as a relaxation of standards.
“The era of prescriptive, micro-level rulemaking is giving way to an outcomes-based regime anchored entirely by the Consumer Duty. However, boards must not mistake ‘simplification’ for deregulation or a lowering of standards,” Sicsic said.
Pet and PMI lines move up the watchlist
The FCA’s insurance roadmap also signalled likely areas of future intervention as it tests how firms are delivering fair value in specific product lines.
Sicsic noted that “the FCA has put pet insurance and private medical insurance (PMI) on its watchlist for potential future action. Both of these sectors have seen sharp price rises and ongoing issues regarding consumer understanding. Product manufacturers in the pet and PMI spaces must proactively review their Consumer Duty management information and fair value justifications now, before the regulator is forced to intervene.”
Those comments sit alongside a broader regulatory focus on price and value outcomes, distribution chains and claims performance.
Legal and compliance advisers expect more intensive day‑to‑day supervisory engagement, even if the number of formal enforcement cases remains limited.
For insurance boards, the message from the priorities report – and from Sicsic Advisory’s response – is that while the FCA is simplifying how it communicates its expectations, it is simultaneously raising the bar on how clearly firms can evidence good consumer outcomes, particularly in the lines now explicitly on its watchlist.
