The Financial Conduct Authority will prioritise simplifying regulation in the insurance market this year as it looks to improve consumer understanding.
The report, Regulatory Priorities — Insurance, outlined the FCA has identified four priorities for the insurance market over 2026 including simplifying its rules to strike the right balance between growth and consumer outcomes.
To achieve this, the authority said that it will simplify its handbook, relying on existing rules where possible instead of creating new ones.
It will also review its value measure rules, including the impact of the rules and how firms have implemented them, and simplify insurance rules and data requirements by assessing whether it needs more reporting changes.
The FCA will work with the Treasury and the Prudential Regulation Authority to review the Senior Managers and Certification Regime to halve its regulatory burden.
FCA director of competition and interim director of insurance, Graeme Reynolds, said: “Insurance provides vital cover for millions of consumers and businesses and contributes billions to the economy.
“We want to raise standards and improve access to insurance. And we want to enable firms to grow and innovate, including by simplifying our rules.
“We’re setting out our priorities clearly, so firms know where to focus their efforts.”
Other priorities
The FCA will also aim to improve consumer understanding, claims handling, and service quality.
It explained “too many people” have had “poor” experiences when attempting to claim on their insurance.
To address this, the authority will analyse how different sales processes affect customer outcomes, and expand its review of firms’ oversight of outsourced claims processes.
Additionally, the FCA will prioritise increasing access to insurance, pointing out that some vulnerable customers do not have access to protection.
Consequently, the authority suggested that firms should consider different consumers’ needs when they develop and review products.
The FCA intends to conclude its pure protection market study this year and will look for ways to reduce the protection gap, improve consumer awareness and claims experiences while also examining further claims ratios and incentives for consumers to switch products.
Finally, the authority identified supporting growth and innovation as its fourth priority for the upcoming year, specifically examining how AI can support brokers and how new products can be developed for emerging risks.
To achieve this, the authority will look at how firms use AI in their internal processes and identify barriers to adoption, and review cyber insurance to improve their understanding of risks, opportunities, and barriers to purchase.
tom.dunstan@ft.com
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