FCA details insurance ambitions for 2026 in new Regulatory Priorities report

The FCA has confirmed its insurance sector priorities for 2026 in the first iteration of its new annual Regulatory Priorities report, which replaces the former practice of sending biennial c.45 portfolio letters. 

In the document, the regulator said it was focused on ”improving consumer understanding, claims handling and service quality”, as well as increasing access to insurance, supporting growth and innovation in the sector and simplifying regulation for 2026. 

The insurance sector has often served as the testing ground for new FCA initiatives and has done so again in this case, with the market chosen as the recipient of the inaugural Regulatory Priorities report, which the FCA will then roll out to other regulated sectors. 

Graeme Reynolds, director of competition and interim director of insurance at the regulator, explained: “Insurance provides vital cover for millions of consumers and businesses and contributes billions to the economy. 

“We want to raise standards and improve access to insurance. And we want to enable firms to grow and innovate, including by simplifying our rules. 

“We’re setting out our priorities clearly, so firms know where to focus their efforts.” 

Regulator expectations 

As part of the new report’s four priority areas for insurance sector firms, the FCA has also laid out its expectations for compliance with its rules. 

For example, as part of its goal to improve consumer understanding, claims handling and service quality, it said it expected firms to clearly tell consumers what their insurance covers and test their understanding, respond promptly, fairly and transparently to consumers and deliver good outcomes when consumers claim and track whether products, services and interactions with consumers were delivering good outcomes. 

In this area, it explained that “too many people have poor claims experiences”, even though it is “seeing progress”.

Where increasing access to insurance is concerned, the regulator said that insurance firms should “review and engage” with the government’s Financial Inclusion Strategy and Motor Insurance Taskforce, as well as focusing on vulnerable customers. 

And, in terms of supporting growth and innovation, it said that firms should “explore how AI can help” and “develop products for emerging or underinsured risks”. 

Critically, the FCA also reaffirmed that it was seeking continued and increased engagement from the sector to drive and influence its own decisions.