Briefing

FCA 2026 Regulatory Priorities Report – Insurance

On 24 February 2026, the Financial Conduct Authority (FCA) published its annual Regulatory Priorities Report for the insurance sector, setting out how it intends to supervise the insurance sector over the coming year. The report replaces more than 40 portfolio letters and provides a single, authoritative statement of the FCA’s expectations across retail, wholesale and life insurance, intermediaries, price comparison websites and funeral plan providers.

The FCA frames its approach as that of a “smarter regulator” – one that is predictable, purposeful and proportionate – while maintaining a strong focus on consumer protection, market integrity and sustainable growth.

The FCA makes clear that protecting the competitiveness of the UK insurance market remains a strategic objective, provided growth is accompanied by high standards and good consumer outcomes.

Supervisory approach

The FCA will continue to implement its revised supervisory model, including:

expanded dedicated supervisory contacts;
a more risk‑based approach for larger firms; and
more targeted and efficient data collection.

Firms that consistently deliver good outcomes can expect less intensive supervision, while the FCA intends to intervene more quickly and decisively where it identifies harm. The FCA also encourages active engagement from firms to inform and refine its supervisory approach.

Four regulatory priorities for 2026

1. Improving consumer understanding, claims handling and service quality

The FCA expects firms to (i) ensure clear communication and consumer understanding of policy coverage, (ii) handle claims promptly, fairly and transparently, and deliver good outcomes, and (iii) monitor whether products, services and interactions with consumers deliver good outcomes.

Building on its response to the Which? super‑complaint, the FCA will, among other things, continue supervisory and enforcement action in the home and travel insurance markets, review firms’ oversight of outsourced and delegated claims arrangements, and analyse how different sales journeys affect consumer outcomes. The FCA will also begin consulting on updates to its Handbook to reflect the Digital Markets, Competition and Consumers Act 2024 (DMCCA 2024).

2. Increasing access to insurance

The FCA expects firms to (i) engage with the Government’s Financial Inclusion Strategy and Motor Insurance Taskforce reports, (ii) deliver good outcomes for consumers, particularly those in vulnerable circumstances, (iii) seek ways to improve access for consumers including developing propositions in the FCA’s Innovation Hub, and (iv) review the FCA’s Premium Finance and interim Pure Protection Market Study findings.

The FCA’s key focus areas include increasing home contents insurance uptake among social renters, reviewing travel insurance underwriting decisions for consumers with pre‑existing mental health conditions, improving motor insurance affordability through claims efficiency and cost control, and ongoing monitoring of the fair value of APRs in premium finance.

3. Supporting growth and innovation

The FCA remains supportive of innovation, including the use of artificial intelligence in underwriting, claims and customer service, although the FCA does expect firms to monitor consumer outcomes and manage associated risks. The FCA also encourages firms to develop products for emerging/under-insured risks. The FCA’s AI Lab/Sandbox and Innovation Pathways provide firms with the opportunity to test ideas and initiatives.

Cyber insurance is identified as a priority growth area, with a focused review planned to examine barriers to uptake and opportunities for improved coverage. The FCA and PRA will also consult on a new regulatory framework for captive insurance.

4. Simplifying regulation

Building on its December 2025 Policy Statement on simplifying insurance rules, the FCA will continue to streamline its Handbook, relying more heavily on the Consumer Duty rather than introducing new product‑specific or product governance requirements.

During 2026, the FCA will consult on further rule and data simplification, including:

disapplying the Consumer Duty to non‑UK business and reviewing the international scope of ICOBS and PROD 4; and
simplifying GAP insurance rules, general insurance pricing data, and information disclosure requirements.

The FCA will also work with HM Treasury and the PRA to review the efficiency and effectiveness of the Senior Managers and Certification Regime (SMCR), with the stated aim of “halving” its regulatory burden.

Other areas of focus

In addition to the four core priorities, the FCA will:

review closed‑book life insurance products following the introduction of the Consumer Duty;
conduct a post‑implementation review of funeral plan conduct of business rules;
assess financial crime systems and controls at retail, wholesale and life insurers; and
introduce new requirements for reporting operational incidents and material third parties.

Conclusion

The FCA’s 2026 insurance priorities reflect a more integrated regulatory agenda, balancing consumer protection, access to insurance, innovation, and regulatory simplification. For firms, the message is clear: embedding the Consumer Duty, delivering consistently good claims outcomes, and engaging constructively with regulatory reform are now baseline expectations. Firms that do so should benefit from a more proportionate supervisory relationship; those that do not should expect faster and firmer regulatory intervention.

Indicative timeline of key priorities

Timeline	Priority Area	Key Activities by the FCA
H1 2026	Consumer understanding & claims & service quality.	Claims handling investigations; analysis of sales processes; DMCCA 2024 application consultation; review of consumer understanding.
Q1 2026-Q3 2026	Access to insurance.	Engagement with the ABI and firms on claims processes; tackling uninsured driving, fraud and crime; Smart Data Accelerator; engagement with insurers on uptake of social renters’ contents insurance; travel insurance and mental health underwriting decisions review; Pure Protection Market Study final report.
Q1–Q3 2026	Growth & innovation.	AI review; cyber insurance review; captive insurance consultation; engagement with industry on the future of insurance products.
H1 2026	Simplifying regulation.	Further rule and data simplification; disapplying Consumer Duty to non-UK consumers; reviewing efficiency and effectiveness of the SMCR.
H1 2026	Other areas of focus.	Child Trust Funds product review; financial crime systems assessment; closed‑book life products review; funeral plans review; new operational resilience and material third parties reporting rules.