● Claims acceptance rates are high.

Whenever the FCA launch a‘ Market Study’ there can be both a sense of unease and opportunity amongst those that participate in the sector. What aspects of the market will they probe? What changes might they make? How can we use our influence to improve the market? How can the market deliver better outcomes for consumers? How might it affect our business? These are the types of questions that firms, both insurers and intermediaries, will have been asking throughout 2025.

Now we have an answer, or at least an early indication, of how this study is going to pan out for the sector as the FCA has now published their interim findings, with a full report expected in Q3 2026.

So, what did they find? Well, it is good news in the main.

The market works well for consumers – generally

This latest FCA publication sets out the stall early, with a range of statistics that demonstrate a healthy market. In summary:

● A wide range of products are distributed through a variety of channels.

Sandy McGregor, Director of Policy, Simplybiz

● Claims ratios( the proportion of total premiums paid out in claims) are generally over 50 %.

● New business premiums remain relatively stable in nominal terms.

● FOS complaints are low- 515 upheld out of 13.8m policies in force in 2024.

● Intermediaries account for around 80 % of sales in 2024.

● The majority of sales are advised, and therefore based on individual needs.

As a result of these findings, the FCA has announced that they do not envisage making any significant interventions.

Is that the end of the story? Well not quite. There are some issues the FCA would like to tackle.

Incentives to switch consumers

The FCA is concerned that a small number of intermediaries may be encouraging customers to switch to a new policy to generate repeat commission. Whilst the data shows the practice is not widespread, the FCA would like the sector to collect, monitor and report better information on customers switching to make sure it’ s aligned with their needs. Ahead of the final report, FCA propose to work with industry to develop the reporting metrics to ensure they’ re proportionate and effective in deterring churn.

Claims experience

As part of the study, the FCA saw examples of some intermediary firms going further than others at point of sale to support customers if / when they eventually come to claim,

6 | The Adviser Online