FCA Insurance Priorities: Impact for Insurers & Intermediaries

What happened?

The Financial Conduct Authority (FCA) has published its first Insurance Regulatory Priorities report, replacing over 40 individual portfolio letters. This landmark report serves as the central annual reference point for boards and senior executives across insurers, intermediaries, and price comparison platforms.

The regulator signals a highly differentiated supervisory approach, offering a lighter touch to firms that can systematically evidence good consumer outcomes, while taking earlier, more assertive action against those that fail to do so.

Why does it matter?

The FCA is explicit that weaknesses remain in claims handling, consumer understanding, and overall service quality, particularly in home and travel insurance following Which’s super-complaint. Furthermore, the regulator is expanding its scrutiny to outsourced and delegated claims arrangements.

Boards must demonstrate effective oversight and remuneration controls over third-party providers (TPAs) and delegated authority networks, which have historically been hard to monitor and audit.

Who is affected?

All UK retail and wholesale insurers, insurance intermediaries, life insurers, and delegated claims handlers are directly affected by these new supervisory standards.

Key risks

Firms face major compliance and operational risks under the new insurance supervision framework:

• Supervisory intervention due to poor claims-handling oversight or unacceptable consumer friction during the claims journey.
• Lack of visibility and weak governance over outsourced claims handlers and delegated authority models.
• Inability to provide robust, outcome-based evidence to satisfy Consumer Duty requirements.

Actions to take

Insurance firms and intermediaries should execute the following actions to align with the FCA:

1. Review claims-handling processes against Consumer Duty outcomes rather than outdated speed-of-service metrics.
2. Audit all delegated authority and third-party administration (TPA) contracts to verify governance and remuneration alignment.
3. Improve data collection across legacy systems to establish a joined-up view of consumer outcomes.

Wider implications

The consolidation of portfolio letters into a single reference report reflects the FCA’s transition to a more agile, risk-based regulator. It places the burden of proof squarely on firms to continuously demonstrate compliant outcomes across the full product lifecycle.

Recommendations

We recommend conducting a comprehensive regulatory gap assessment of your outsourced claims governance and designing a data-led management information framework to systematically track and report outcomes.