Briefing: Is more regulation really the answer?

Having appeared before the House of Lords inquiry into the regulation of the consumer insurance market this month (10 June 2026), I was struck by how often the discussion returned to a simple question – after years of new regulation launches, should the sector be subject to even more?

It is a fair question. After all, the insurance industry has already seen significant regulatory intervention in recent years. Fair value, pricing reforms, Consumer Duty and a series of FCA reviews have all sought to improve customer outcomes since 2020.

Yet wide-spread concerns around home and travel insurance persist, culminating in the Which? super-complaint last September that helped to prompt the House of Lords inquiry itself – this was launched in May 2026 by the House of Lords Financial Services Regulation Committee.

And some witnesses to the inquiry have argued that further regulation is needed as a result, particularly around product standards, comparison sites and claims handling. Their argument is understandable.

Consumers can now buy insurance more easily than ever, but that does not mean they understand what they are buying, nor that they can assess how a policy will perform when they need to claim.

That distinction matters. Most consumers can compare insurance on price within minutes. They can often compare headline features and product ratings too. But they cannot easily compare the performance of a product when it matters most – when they come to make a claim.

In other words, the market is very good at helping consumers compare the cost of insurance. It is much less good at helping them compare its value.

That creates an obvious problem for an outcomes-based regulatory regime – such as we have in UK general insurance (UKGI).

Desire for data

Consumer Duty, which was introduced by the FCA in July 2023, asks firms to focus on the outcomes customers receive – but the insurance market still lacks a consistent, accessible way to measure and compare those outcomes.

The challenge is that much of the data needed to assess outcomes already exists, but it remains fragmented across multiple sources and difficult for consumers to interpret.

At Insurance DataLab, this is something we have spent a significant amount of time analysing. Through our work exploring FCA value measures data, regulatory and ombudsman complaints data and through the development of our proprietary Insurer Performance Index, we have sought to bring together different measures of insurer performance to give a more rounded view of how firms are delivering in practice.

This is because no single metric tells the whole story.

Claims acceptance rates are useful, but they do not show whether customers were satisfied with the outcome. Complaints data is valuable, but it only captures customers who complained. Financial Ombudsman Service uphold rates are important because they provide an independent view, but they sit at the end of the dispute process.

Taken together, however, these measures can provide a much clearer picture.

The evidence so far does not suggest that Consumer Duty has failed. It is still bedding in – and complaints data can lag behavioural change. But nor does the available data show a clear and consistent improvement in customer outcomes.

Complaints trends, claims disputes and ombudsman outcomes have yet to demonstrate the step change many expected – and hoped for – when Consumer Duty was introduced.

That should matter to insurers as much as regulators.

Answers and outcomes?

Claims handling is where the insurance promise is tested. If customers only discover the limits of cover when they claim – or if they face delays, poor communication or disputed settlements – then the insurance industry will struggle to rebuild trust with its customers.

The answer, for me, is not more regulation. The UK insurance market is already heavily regulated. That said, I would expect to see more intervention and enforcement from the FCA where firms consistently fail to deliver good customer outcomes. And that is something I would firmly support.

But if the industry wants to avoid more prescriptive regulation, it needs to show that existing rules are producing measurable improvements.

That means better data, better transparency and a clearer willingness to identify where outcomes are falling short.

The House of Lords inquiry has therefore asked an important question. But the real test is not whether the market can demonstrate compliance with regulation. It is whether the market can demonstrate that customers are genuinely receiving better outcomes.