• The FCA has published its 2026 Insurance Regulatory Priorities report—the first of its Regulatory Priorities reports, which replace portfolio letters with an annual consolidated overview of its priorities across the relevant sector.
• A central theme is improving consumer outcomes, in particular, clearer consumer understanding of insurance cover, better claims handling and higher service quality.
• Increasing access to insurance, including for consumers in vulnerable circumstances, is another core theme, alongside a focus on fair value.
• The FCA also signals an agenda to support innovation and simplify insurance regulation over 2026, while also flagging other areas of focus beyond the key priorities.

Background. On 24 February 2026, the Financial Conduct Authority (the “FCA”) published its Regulatory Priorities: Insurance report (the “Report”), setting out its areas of supervisory and policy focus for the year ahead, applicable to retail and wholesale insurers, life insurers, insurance intermediaries, price comparison websites and funeral plan providers.

The Report is the first in a new set of nine annual “Regulatory Priorities” reports that the FCA is introducing to replace its portfolio letters. The FCA states that each sector report will set out key priorities for that sector and the further work the FCA expects to undertake over the coming year.

The FCA organises its insurance priorities in the Report around four themes for 2026: (i) improving consumer understanding, claims handling and service quality; (ii) increasing access to insurance; (iii) supporting growth and innovation; and (iv) simplifying regulation.

Improving Consumer Understanding, Claims Handling and Service Quality. The Report notes that too many consumers have poor claims experiences and emphasises that firms should comply with the Consumer Duty where it applies, communicate clearly so consumers understand their cover, respond to claims and queries promptly, fairly and transparently, and monitor whether products and services deliver what has been promised.

In particular, the FCA highlights home and travel insurance claims handling and its response to the Which? super complaint review. The FCA will continue supervisory and enforcement investigations, review firms’ oversight arrangements and drive improvements. It will also review how firms are acting to improve consumers’ understanding of their cover.

The Report also references the FCA’s intention to support the Association of British Insurers’ (“ABI”) work on storm claims and cash settlements, and highlights that the ABI’s actions include updating consumer guidance on storms and flooding, expanding FAQs on property maintenance and claims processes, and revising storms advice to firms. The FCA further notes that price comparison websites can strengthen consumer understanding by providing comparable information.

The FCA indicates that it will also analyse how different sales processes affect consumer outcomes. It also plans to expand its review of firms’ oversight of outsourced claims processes to include different delegated authority models and remuneration arrangements, and to analyse claims and other service quality to test whether firms’ services deliver good outcomes.

The Report highlights where the FCA has taken action, noting that the FCA’s work on Motor Total Loss claims will result in around 270,000 drivers receiving compensation.

Increasing Access to Insurance. Access to insurance, particularly for vulnerable consumers, is identified as a key priority. The FCA refers to the Government’s Financial Inclusion Strategy and the Motor Insurance Taskforce reports, stating that it is committed to taking forward the actions identified in those initiatives and that firms and industry stakeholders should consider their findings and where changes may be appropriate to improve consumer outcomes.

The FCA plans to work with consumer groups, insurers and trade bodies to increase home contents insurance uptake among social renters, and to also focus on travel insurance underwriting decisions for consumers with pre-existing mental health conditions.

In the motor sector, the FCA will work with the ABI and firms to improve efficiency and control costs in claims handling to encourage lower premiums, support insurance use cases for smart data and continue calling for social media platforms to do more to address fraudulent content, including ghost broking (i.e., the criminal act of fraudsters posing as brokers and selling fake motor insurance policies).

The Report also highlights the FCA’s premium finance market study, which found a significant fall in the monthly cost of paying for insurance since 2022, with estimated annual consumer savings of £157 million. Nevertheless, the FCA has questioned some firms on their fair value assessments and will continue to monitor annual percentage rates and act where it has concerns about fair value.

In relation to pure protection, the FCA’s interim findings indicate that the market is working well in many respects but that issues remain, including closing the protection gap. The FCA intends to conclude this market study later in 2026.

Supporting Growth and Innovation. The FCA links its insurance priorities to supporting UK competitiveness and growth, with particular emphasis on technology and the development of products addressing emerging risks. It encourages firms to innovate, including using artificial intelligence (“AI”), and to engage with its AI Lab and sandbox services, and states that it will publish an evaluation report from AI Live Testing by the end of the year. However, the FCA makes it clear that firms must monitor consumer outcomes closely and mitigate identified risks.

During 2026, the FCA will evaluate the risks and opportunities of AI in insurance, including its use in underwriting, claims and consumer services, and identify barriers to adoption. It also intends to review cyber insurance to improve its understanding of risks, opportunities and barriers to purchase. Further, the FCA will consult, together with the Prudential Regulation Authority (the “PRA”), on a regulatory framework for captive insurance.

The FCA further notes that it intends to continue engaging with the industry on the “future of insurance” and wants to hear views on how it can help firms develop products to meet new and evolving needs.

Simplifying Regulation. The FCA reiterates its commitment to simplifying its Handbook while maintaining appropriate consumer protections. It refers to its December 2025 policy statement on simplifying insurance rules and indicates that it will continue to simplify the FCA Handbook, relying where possible on existing rules, particularly the Consumer Duty, rather than creating new ones.

Planned steps include responding to consultations on removing certain product-specific rules, rationalising conflicts of interest rules and deleting certain pricing data returns, consulting on disapplying the Consumer Duty to non-UK business and reviewing the international scope of ICOBS (conduct of business) and PROD 4 (product governance) rules and consulting on further simplification of insurance rules and reporting requirements.

The FCA will also review the impact of its value measures rules and work with HM Treasury and the PRA to review the Senior Managers and Certification Regime to reduce its regulatory burden.

Other Areas of Focus. Beyond the four priority themes, the FCA identifies several additional areas of focus for 2026. In relation to life insurers, the FCA will consider how firms are ensuring good outcomes for consumers with closed book products, including for Child Trust Funds and further products.

Given the Funeral Plan: Conduct of Business sourcebook was introduced in 2022, the FCA will review and assess whether such rules are still delivering the intended outcomes.

The FCA is also reviewing the effectiveness of financial crime systems and controls across a sample of larger insurers and, lastly, together with the PRA, will introduce new rules on reporting operational incidents and information on material third parties following its 2024 consultation on this matter.

Next Steps and Implications. The Report includes an indicative timeline of key dates for 2026 and notes that plans may change where new priorities emerge or existing priorities change scope. As the FCA transitions to this new annual priorities framework, boards and senior management should ensure that relevant workstreams are aligned with the FCA’s stated focus areas for 2026.

Additional sector reports are scheduled for publication in March 2026 (including, among others, consumer investments, pensions, retail banking and mortgages, and consumer finance). The FCA notes that firms should assess which priorities across the suite apply to them, particularly where their activities span multiple sectors.

This publication is for general information purposes only. It is not intended to provide, nor is it to be used as, a substitute for legal advice. In some jurisdictions it may be considered attorney advertising.