Regulatory Priorities for Insurers – what firms should do next?

The FCA’s Deputy CEO Sarah Pritchard states “Our goal is simple: less intensive attention on firms doing the right thing, and stronger, faster action where harm is greatest”

The FCA’s wants to take a proportionate and risk-based approach which demonstrates the desire to raise standards across the market. Firms taking the right action are able to benefit from less scrutiny, enabling the FCA to focus on a greater cross-section of the market to drive:

1. Delivery of good customer outcomes;
2. Increased access for consumers;
3. Support for growth and innovation.

This article is the first in a series of three that Konexo is producing and focuses on FCA priorities regarding the sales and claims processes.

Actions firms should be taking in response to FCA priorities

Communicating clearly with consumers during the sales process

FCA focus areas include:

1. Analysing different sales processes to consider how they are affecting customer outcomes
2. Reviewing the actions home & travel insurance providers have taken to improve customer understanding

Firms should consider:

• Reviewing their sales processes to understand whether consumers are getting the right information, at the right time during the sales process;
• Testing whether the information provided to consumers is easy to understand. This is particularly important where there are key facts which materially impact the cover or actions that the consumer would need to take to benefit from the policy;
• Looking at the outcomes being delivered across all distribution channels to understand whether communication is better through some channels compared to others, and looking to enhance where needed;
• Whether outcomes testing data is being successfully assessed to identify issues that link back to customer understanding or presentation of products during the sales process; and
• Creating a robust audit trail which demonstrates actions have been taken and evidences improved customer outcomes.

Handling claims effectively and efficiently

FCA focus areas include:

1. Continuing to monitor the outcomes being achieved across home & travel insurance claims.
2. Supporting Association of British Insurers (ABI) in its work on storms claims and cash settlements.
3. Analysing claims handling to determine whether the service being delivered is resulting in good customer outcomes.

    

4. Expanding its review into the oversight of outsourced claims processes to include delegated authority models and remuneration.
5. Supporting the Motor Insurance Taskforce – a focus on increased claims handling efficiency and costs to bring down motor insurance premiums and support inclusion.

Firms should consider:

• An independent claims handling review (if they haven’t undertaken one already), to look at the end-to-end claims handling operating model to assess customer outcomes, use of technology, operational efficiency, governance, standard operating processes and fraud related issues. This review would not only provide recommendations on how to improve customer outcomes, but also drive a more efficient operating model, reducing customer wait times and claims handling costs;
• Whether outcomes monitoring is demonstrating tangible improvements as a result of changes that have been made, and if not, what further review and improvements could be made to deliver enhanced consumer outcomes during the claims handling or sales process;
• How the claims handling process supports vulnerable customers through the journey and considers the impact of their vulnerability where needed on the claim outcome.
• How claims related complaints are handled within the organisation, and ensure learnings from complaints are fed back into the claims operation;
• Their approach to cash settlements as part of claims handling to ensure that they provide fair value to customers; and
• Oversight of claims handling outsourcers, looking at how outsourcers are selected/onboarded, contracted and remunerated and monitored on an ongoing basis to ensure delivery of good customer outcomes.

Reducing regulatory risk now

In 2025, the FCA undertook a range of targeted product activity across the insurance market. However, the Regulatory Priorities for this year are wide ranging and cut to the heart of the insurance business model.

The FCA is not only looking for firms to comply with all aspects of Consumer Duty, but to be able to actively demonstrate good customer outcomes, identify issues, and take swift actions to drive continual improvement,  and to own and deliver value across all operational areas. It’s goals are not only to ensure compliance across the market but to continually challenge it, and ensure the way it operates does not reduce access for consumers.

There is a lot for firms to consider this year, but ensuring that you are able to look at all aspects of the FCA’s priorities through a regulatory, operational efficiency, data and technology lens is crucial to ensuring good customer outcomes are delivered, through an efficient operating model which reduces cost to serve.

(This article is the first in a series of three.)