FCA Insurance Regulatory Priorities 2026: Compliance Guide for Insurers & Brokers

The Financial Conduct Authority (FCA) has published its 2026 Regulatory Priorities for the Insurance Sector, setting out the regulator’s supervisory focus across insurers, MGAs, brokers, intermediaries and price comparison platforms.

These priorities replace the historic portfolio letter approach and are intended to provide firms with a single, clear view of regulatory expectations. In practice, they represent the FCA’s supervisory agenda for the year ahead, and therefore a critical reference point for boards, compliance functions and senior managers.

For firms operating within the UK insurance market, the message is clear: Consumer Duty outcomes, governance effectiveness and demonstrable compliance frameworks remain central to FCA supervision.

A Shift Towards a "Smarter Regulator"

The FCA describes its evolving supervisory model as one that is predictable, purposeful and proportionate. Rather than issuing multiple communications across different supervisory teams, the regulator is consolidating expectations into annual sector priorities.

This change places greater responsibility on firms themselves. Boards are expected to review the priorities, assess their exposure to regulatory risk, and ensure their internal FCA compliance framework reflects current supervisory themes.

In practical terms, firms should already be asking:

• Does our compliance monitoring plan reflect current FCA risks?

• Are Consumer Duty outcomes evidenced rather than assumed?

• Is senior management oversight clearly documented?

• Have we performed a recent compliance risk assessment?

For many insurance intermediaries, this will require enhanced ongoing compliance support and periodic regulatory health checks to ensure alignment with the regulator’s direction of travel.

Improving Consumer Understanding and Claims Outcomes

The FCA’s first and most prominent priority focuses on consumer experience, particularly claims handling and service delivery.

Insurance is intended to provide protection when consumers need it most. However, the FCA continues to identify poor claims experiences, unclear policy wording and weak oversight of outsourced claims arrangements.

The regulator expects firms to demonstrate that they:

• communicate insurance cover clearly and transparently

• handle claims promptly and fairly

• monitor whether products deliver promised outcomes

• oversee third parties and delegated authority arrangements effectively

Following the Which? super complaint, the FCA will continue supervisory and enforcement investigations into home and travel insurance claims handling during 2026.

This signals continued regulatory scrutiny of operational delivery, not just product design. Firms should ensure their compliance monitoring framework includes outcome testing, claims MI analysis and clear Consumer Duty governance.

Increasing Access to Insurance

A growing theme within FCA supervision is financial inclusion. The regulator recognises that certain consumer groups remain uninsured or under-insured, leaving them financially vulnerable.

The 2026 priorities emphasise improving access to insurance products while maintaining fair value standards. Key areas of focus include:

• increasing home contents insurance uptake among social renters

• reviewing travel insurance decisions involving mental health conditions

• monitoring premium finance affordability

• addressing the UK protection gap

Firms should ensure their business wide risk assessment (BWRA FCA) and product governance processes consider accessibility and vulnerable customer outcomes alongside traditional conduct risks.

Access to insurance is now firmly positioned as both a consumer protection issue and a market stability concern.

Support Growth and Innovation

Alongside consumer protection, the FCA is signalling a stronger commitment to supporting market growth and innovation.

The regulator wants insurers to develop products addressing emerging risks while responsibly adopting new technologies such as AI. Firms are encouraged to test solutions through the FCA regulatory sandbox and innovation services.

Areas receiving particular attention include:

• responsible use of AI across underwriting and claims

• development of cyber insurance markets

• removal of barriers to innovation

• consultation on a captive insurance regulatory framework

While innovation is encouraged, the FCA makes clear that technological development must remain supported by robust governance and a structured regulatory compliance framework.

For firms expanding into new products or business models, early compliance consulting services and risk management consultancy support can significantly reduce regulatory friction.

Simplifying Insurance Regulation

One of the most notable aspects of the 2026 priorities is the FCA’s commitment to simplifying insurance regulation.

The regulator acknowledges that rules have expanded significantly over time and intends to reduce unnecessary complexity while maintaining consumer protections.

Planned initiatives include:

• simplifying insurance handbook rules

• reducing data and reporting requirements

• relying more heavily on Consumer Duty rather than introducing new rules

• reviewing the Senior Managers & Certification Regime to reduce burden

This represents an important regulatory evolution: fewer prescriptive rules, but greater expectations that firms can evidence good outcomes through effective governance and monitoring.

As a result, firms should consider conducting a compliance gap analysis to confirm their arrangements remain aligned with the changing regulatory environment.

Additional FCA Areas of Focus

Beyond the headline priorities, the FCA highlighted several ongoing supervisory themes likely to drive future reviews and interventions.

These include:

• financial crime systems and controls effectiveness

• operational incident and material third-party reporting

• outcomes for closed book life insurance products

• funeral plan conduct rule reviews

• continued action against ghost broking and insurance fraud

These developments reinforce the importance of maintaining a dynamic and risk-based compliance monitoring plan rather than relying on static policies.

What Insurance Firms Should Do Now

The FCA’s 2026 Regulatory Priorities confirm a continued shift toward outcomes-based supervision.

Insurance firms should consider taking the following practical steps:

• Review and update their compliance monitoring plan

• Reassess Consumer Duty governance and MI

• Refresh their business wide risk assessment

• Test claims handling outcomes and service quality

• Conduct an independent regulatory health check

• Ensure innovation initiatives sit within a documented governance framework

Firms preparing to expand or restructure may also require specialist FCA authorisation support, particularly where new permissions, business models or distribution arrangements are involved.

How Compliance Angle Can Help

At Compliance Angle, we provide practical, commercially focused compliance consulting and advisory support to UK insurance firms.

Our services include:

• FCA application support and assistance with FCA authorisation

• Compliance monitoring framework design and implementation

• Consumer Duty reviews and outcome testing

• Compliance gap analysis and regulatory health checks

• Ongoing compliance support for insurers, brokers and MGAs

The FCA’s latest priorities reinforce a simple reality: compliance is no longer about documentation alone, it is about demonstrable governance, measurable outcomes and proactive risk management.