FCA Insurance Regulatory Priorities report: key impacts for insurers and intermediaries

In February, the FCA published its first Regulatory Priorities report for the insurance sector, marking a significant shift in how supervisory expectations are communicated. The report replaces over 40 portfolio letters and is intended to become the FCA’s central annual reference point for boards and senior executives across retail and wholesale insurers, intermediaries, price comparison websites, life insurers and funeral plan providers.

The FCA signals a more differentiated supervisory approach. Firms that can evidence consistently good consumer outcomes may see a lighter touch, while those unable to do so should expect earlier and more assertive action. For insurance leaders, the report is not a passive update but a call to review, evidence and, where needed, recalibrate how firms are governed, managed and monitored.

A sector under continued scrutiny

Insurance remains central to the UK economy and household financial resilience, yet the FCA is explicit that persistent weaknesses remain, particularly in claims handling, consumer understanding and service quality. Poor outcomes at the point of claim remain a central regulatory concern.

In its Insurance Regulatory Priorities report, the regulator highlights continued supervisory and enforcement focus on claims handling and service quality, particularly in home and travel insurance, and confirms that this work builds directly on its response to the Which? super-complaint. Firms must demonstrate that claims processes consistently deliver fair, timely and transparent outcomes for consumers.

Alongside this, the FCA is sharpening its focus on oversight, data and evidence. The regulator expects boards to demonstrate, not assume, that products deliver what they promise, and that outsourced and delegated arrangements are properly governed.

The FCA’s four regulatory priorities for insurance

The report groups the FCA’s insurance focus into four priorities: improving consumer understanding, claims handling and service quality; increasing access to insurance; supporting growth and innovation; and simplifying regulation and supervision.

On consumer understanding, claims handling and service quality, the FCA says too many consumers still struggle to understand their cover and experience avoidable friction and delay when making claims. Firms are expected to ensure communications are clear at every stage of the journey and that claims are handled promptly, fairly and transparently, in line with Consumer Duty outcomes.

A key escalation is the expanded scrutiny of outsourced and delegated claims arrangements. The FCA will assess whether boards have appropriate oversight, governance, remuneration controls and management information across third-party and delegated authority models, where weaknesses have historically been difficult to evidence and challenge.

Increasing access to insurance

Access to suitable insurance is framed as essential to consumer resilience. The FCA expects firms to consider how products, pricing, distribution and underwriting decisions may be excluding vulnerable or underserved consumers, and to engage with wider government and industry initiatives aimed at improving inclusion.

Access is not positioned as a trade-off against conduct. Firms must show that expanded access remains compatible with fair value, suitability and sustainable outcomes.

Supporting growth and innovation

The FCA continues to emphasise that it supports sustainable growth and innovation, provided they are underpinned by appropriate governance, data controls and risk management. Firms are encouraged to engage with the FCA’s Innovation Hub and to modernise operations where this improves efficiency and outcomes.

For insurance leaders, innovation must be matched with clear accountability, reliable decision-making and the ability to evidence how new propositions support Consumer Duty objectives.

Simplifying regulation and supervision

The FCA aims to be a “smarter regulator”: predictable, proportionate and risk-based. Firms demonstrating good governance, culture and reliable management information can expect less intensive supervision over time.

However, simplification places greater responsibility on firms themselves. Boards are expected to interpret the priorities, assess applicability across their business models and act where gaps exist.

What this means for boards and senior executives

Across the insurance market, the direction of travel is consistent: assurance is shifting from policy compliance to outcome evidence. Senior leaders need confidence that oversight frameworks genuinely reflect what is happening across product design, sales journeys, claims and third-party arrangements.

This is particularly challenging in insurance, where data, processes and accountability are often fragmented across lines of business, legacy platforms and outsourced partners. Without clear, trusted management information, firms risk being unable to demonstrate that they are delivering good outcomes, even where intent is sound.

What firms should be doing now

Based on the FCA’s priorities, insurance firms should consider:

• Reviewing claims handling and consumer understanding through the lens of Consumer Duty outcomes, not legacy process metrics.
• Mapping outsourced and delegated authority arrangements and testing whether governance, MI and remuneration structures genuinely enable effective oversight.
• Assessing whether access or exclusion risks exist within underwriting, pricing or distribution models, and whether these are understood at board level.
• Ensuring innovation and growth strategies are supported by proportionate but strong governance and data controls.
• Challenging whether current board and executive information provides a reliable, joined-up view of consumer outcomes across the full insurance lifecycle.

How Recordsure supports insurance firms

Recordsure works with boards, executives and regulated functions to bridge the gap between regulatory expectations and operational reality.

Support includes:

• Targeted regulatory gap assessments aligned to FCA sector priorities and Consumer Duty outcomes.
• Operating model and governance design, ensuring oversight frameworks are proportionate, scalable and defensible.
• Interim executive and specialist resourcing, supporting claims transformation, governance remediation and oversight roles where capacity or experience is constrained.
• Data-led assurance and MI design, helping firms evidence outcomes across complex and outsourced environments.

Where firms need to move quickly, whether to respond to supervisory engagement, strengthen claims oversight or prepare for increased scrutiny, Recordsure provides experienced leadership and practical delivery support from day one.