The Financial Conduct Authority (FCA) has announced a significant expansion of its work to tackle poor standards in the home and travel insurance markets. This move comes in direct response to a formal super-complaint lodged by consumer champion Which? in September 2025.
Regulator's Response to "Serious Failings"
The City watchdog confirmed it will intensify its efforts over the coming year, focusing on two critical areas: the claims process and how well consumers understand their policies. The FCA stated it will review firms' customer service and how they manage third parties involved in claims handling. Simultaneously, it will analyse the various methods insurers use to sell their products, aiming to ensure customers have the right information to make informed choices.
In its official response to Which?, the regulator acknowledged that while most consumers were satisfied with their claim outcome in 2024, the data tells a concerning story. "Compared to other insurance products, home and travel have persistently lower claims acceptance rates," the FCA noted. It pointed out that in 2024, 99% of motor claims were accepted, starkly contrasting with 80% for standalone single-trip travel claims and just 74% for home contents-only claims.
Enforcement Action and Industry Accountability
The FCA has already taken decisive steps since initiating a review of the sector in July. It has opened two enforcement cases, prevented one firm from trading until it rectifies identified issues, and launched three independent reviews into company systems. Senior managers have been compelled to address problems and consider if customer redress is necessary.
Graeme Reynolds, the FCA’s Director of Competition and Interim Director of Insurance, welcomed Which?'s intervention. "We’ve set out more detail on the action we’ve already taken to fix problems, and we’re expanding our existing work-plan," he said. The regulator warned it would measure the impact of its actions and hold the industry to account if improvements in claims outcomes are not seen.
Consumer Champion Demands Fundamental Reform
Which?'s super-complaint highlighted three core concerns: poor claims-handling, inappropriate sales processes, and a perceived lack of enforcement of FCA rules. The group cited "heartbreaking" stories from hundreds of policyholders and emphasised the vast scale of the market, with 32 million UK adults holding contents insurance and 15 million holding annual travel insurance in 2024.
Rocio Concha, Which? Director of Policy and Advocacy, said: "The actions announced today must be the first step towards fundamental reform... These issues have been allowed to fester for years." She urged the FCA to act with urgency to ensure commitments translate into meaningful change for consumers.
The Association of British Insurers (ABI) responded, with Director General Hannah Gurga stating that driving improvements in claims-handling and customer understanding remains a top priority for the industry. She expressed a commitment to working with the FCA and Which? to strengthen trust in the sector.
The FCA stated it will gauge success through key metrics, including fewer complaints about claims, improved satisfaction scores in its Financial Lives Survey, and demonstrable steps taken by firms to enhance their practices.
