| Date Issued: | 23/10/2026 | Applicable to: | Insurance firms | |
| Link(s): | Financial Services Regulation Committee publishes report on home and travel insurance regulation – Committees – UK Parliament Home and travel insurance regulation: more for the FCA to do | |||
Context
The FSRC, chaired by The Baroness Noakes DBE, launched an inquiry in May 2026 into the regulation of consumer home and travel insurance, with a focus on the Financial Conduct Authority’s approach. The FSRC has now published its final report on the FCA’s regulation of home and travel insurance. The key messages are that there is ‘more for the FCA to do’, that the FCA and industry accelerate their work to improve consumer understanding of home and travel insurance products, and that the FCA must create clear timescales for its proposed work in relation to home and travel insurance.
Key points to note and next actions
The Committee’s report includes findings that:
- Home and travel insurance products have low claims acceptance rates relative to other retail insurance products. They are inherently complex and consumer understanding remains low, despite the FCA’s Consumer Duty requiring firms to support it.
- Price comparison websites have driven intense price-led competition in the UK market. This has helped consumers find affordable products, but has led to a focus on price rather than overall product value.
- There is a lack of readily available and comparable data on elements of product value other than price, especially claims outcomes. This inhibits consumers from comparing products and prevents price comparison websites from comparing product value effectively.
- The effects of poor consumer understanding often become clear only when a claim is made. Products purchased on price rather than levels of cover, and a lack of understanding about what is and is not covered, both contribute to persistently high rates of declined claims.
- Claims experiences can vary significantly. The FCA has acknowledged the need for further work on claims-handling practices that carry a higher risk of consumer harm, including outsourced claims handling and cash settlements.
- There are concerns about the growing use of AI by consumers to research home and travel insurance, which is not regulated by the FCA.
- The Consumer Duty has not yet translated into improvements for consumers.
- Clear expectations and robust outcomes data are key to the success of the Consumer Duty.
- The FCA has a number of actions in train but the timetables for completion are not clear, so it it should produce a roadmap of what it is doing.
The report recommends that:
- The industry and the FCA must accelerate their work to improve consumer understanding of home and travel insurance products, particularly what is and is not covered by policies.
- The FCA must outline how it will address poor claims-handling practices.
- The FCA should consider what it can do to make consumers aware of the potential problems of relying on AI when making insurance purchasing decisions.
- In the absence of the industry agreeing on comparable metrics, the FCA should step in to ensure that comparable outcomes data is widely available. The FCA should also develop how it measures the impact of the Consumer Duty, in order to realise its potential to improve consumer outcomes.
- The FCA is pursuing many of the issues outlined, but the timetables for completion are unclear. The FCA should produce a roadmap with clear timescales for delivery.