The Financial Conduct Authority (FCA) has issued detailed information requests to more than 30 insurers and intermediaries as research for its pure protection market study.
The regulator is also conducting consumer research to inform its understanding of how sales processes and channels work.
Following on from these projects two papers will be published in the third quarter of 2025.
In June, Health & Protection revealed the FCA had begun sending out data requests to insurers, with the requests asking for data from the years 2021 to 2024 and including a deep focus on business models and the fair value of distributor commission.
This has now been extended and includes intermediary firms, according to an update posted by the regulator.
“We asked firms to provide information about sales, their distribution strategy, commissions, the nature of competition, and consumer outcomes,” the FCA said.
“We will use the information to examine many of the concerns listed in our terms of reference such as the incentives created by commission structures, competitive constraints on insurers and intermediaries, the influence of other market participants on distribution, and potential barriers to innovation and investment.
“We are currently receiving and processing requests for information responses. We expect to complete much of our review and analysis in Q3 2025.”
Consumer research
The consumer research is also in progress and is expected to be completed in early August.
“We are exploring consumers’ experience of purchasing pure protection products and the outcome, considering differences between different types of consumer and distribution channel,” the regulator said.
“This is to help us assess how confident and effective consumers are at selecting and purchasing protection products.”
At least two papers are intended to be published in early Q3 2025, ahead of the FCA’s interim report scheduled for the end of the year.
These will include:
- Market overview. A paper setting out a factual overview of the retail pure protection sector in the UK which will form the FCA’s understanding of the markets for its subsequent analysis. It will cover the main products, distribution channels, firm participants, customers, regulatory landscape and market developments.
- Consumer research. A paper setting out the findings of the consumer research on pure protection in the UK.
‘High impact’
In April the FCA’s regulatory initiatives grid said it expects a “high” indicative impact on firms and said there was formal engagement planned in April to June, and July to September this year with a key milestone set for the last three months of the year.
Further formal engagement is planned for the first six months of 2026 with a key milestone in place post-July 2026.
Last August the regulator revealed it would be conducting a review into the operation of the pure protection market including commission structures including loaded commission and the shrinking insurer market.
In March the FCA expanded the areas under consideration for its pure protection market study to include restricted panels of insurers used by distributors’ cover for customers who have pre-existing medical conditions and barriers to innovation and investment.
It will also consider the activities of reinsurers, portals, product comparison platforms, and lead generators as part of its pure protection review.
These had not been within the scope of the study when the FCA published its initial terms of reference in August 2024, but have been added after consultation with the market.
However, private medical insurance (PMI), business and key person insurance, accident, sickness and unemployment insurance (ASU), funeral plans and insurance products with a savings or investment element will be outside the scope.
