The Financial Conduct Authority (FCA) will look into claims experiences and incentives for consumers to switch products as part of its pure protection market study.
The regulator has already confirmed it will further examine income protection claims ratios as part of the review which will see its final report published in the third quarter of the year.
The FCA also committed to a focused review into how firms are delivering good outcomes for customers of closed-book life insurance products.
These commitments feature among the first edition of the regulator’s annual priorities for insurance report.
In the third quarter of this year, it will look into the future of insurance products, starting a conversation later this year with the sector on the future of insurance products and how the regulator can help to reduce barriers.
The FCA will also prioritise reviewing the rules in its Funeral Plan: Conduct of Business’ sourcebook (FPCOBS) and the simplification of its Consumer Duty rulebook.
Market Study
The regulator confirmed it will conclude its Pure Protection Market Study this year and will look for ways to reduce the protection gap, improve consumer awareness and claims experiences and also examine further claims ratios and incentives for consumers to switch products.
Following the publication of its interim report at the start of this year, it will publish the Pure Protection Market Study final report in Q3 2026.
Subject to findings, it added it will undertake further work.
In particular with claims experiences, the FCA said it will work with the Association of British Insurers (ABI) and firms “to consider how claims can be better managed to ensure greater efficiency and cost control, without adversely affecting consumer outcomes”.
Focused product review
In the second quarter of the year, the regulator revealed it will conduct a focused product review on closed-book life insurance products.
The review will explore how firms are delivering good outcomes, following introduction of the Consumer Duty, to closed-book life insurance consumers.
This year, the FCA confirmed it will consider this for Child Trust Funds and further products.
Touching on regulation of funeral plan providers, the FCA confirmed it will review the rules in its Funeral Plan: Conduct of Business’ sourcebook (FPCOBS).
First introduced in 2022, this year’s review will assess whether they are delivering the intended outcomes.
The first quarter of the year will see the FCA further engage on simplifying its rulebook.
Its work will cover current open consultations, changes as part of the Consumer Duty requirements review, and further changes to simplify insurance rules and reduce reporting requirements.
Within its work to simplify insurance rules and data requirements as set out in PS25/21, it will consult on disapplying the Consumer Duty to non-UK business and review the international scope of ICOBS and PROD 4 in the first half of the year.