UK regulator expands insurance scrutiny after Which? super-complaint

The Financial Conduct Authority said it will broaden its scrutiny of how home and travel insurers process claims and explain policy terms, in response to a super-complaint filed by consumer group Which?. The watchdog noted that some problems require addressing and said it will widen its review of claims processing and the clarity of policy language to help consumers understand what they are buying.

Which? argued that the home and travel insurance sectors were broken, saying that in some cases making a claim can be a worse experience than the initial incident. The consumer group pointed to three areas of concern: how claims are handled, with many outsourced to specialist firms; the sales practices of insurers that can create confusion about coverage; and what Which? described as insufficient protection for consumers by the regulator.

The FCA notes that millions of policyholders hold home and travel policies. Last year, about 22 million home insurance policies were in force, with consumers paying more than £7 billion in premiums. There were almost 900,000 home-related claims, resulting in payouts of roughly £3.2 billion. Travel policies were even more numerous, with more than 6.8 million in force and premiums around £1.2 billion; about 600,000 travel claims led to payouts exceeding £400 million. The regulator also highlighted that acceptance rates vary by product: 99% of motor claims were accepted in 2024, compared with 80% for standalone single-trip travel claims and 74% for home content-only claims, a spread the FCA linked in part to lower consumer understanding of policy coverage.

Graeme Reynolds, the FCA’s director of competition, said the regulator would expand its existing workplan to ensure improvements to the claims process and to consumer understanding of cover. The move comes despite the FCA saying it has already addressed several concerns, while consumer groups pressed for stronger, more lasting changes to how the insurance markets operate and protect customers.

The Association of British Insurers (ABI), which represents insurers, welcomed the FCA’s focus and called improvements a top priority for the sector. Still, Which? and other groups urged the regulator to translate scrutiny into meaningful reforms that reach policyholders in practical terms and reduce friction in the claims journey.

Rocio Concha, Which? director of policy and advocacy, urged the FCA to translate concerns into tangible change that stops bad practices from persisting. James Daley, managing director of consumer group Fairer Finance, warned that the FCA’s response might not be enough to address the sector’s broader problems, arguing that a price-driven race to the bottom has contributed to weaker products and poorer claims experiences for consumers.

As the FCA expands its review, industry and consumer groups alike say the next steps should include clearer policy documentation, more transparent claims-handling practices, and stronger accountability for firms and their leaders. The watchdog emphasized that it will continue to monitor firms’ progress and hold senior leaders to account as part of its broader objective to ensure fair value insurance for consumers.