This morning the House of Lords Financial Services Regulation Committee published its report on home and travel insurance, under a title that does the summarising for it: more for the FCA to do. After a five-month inquiry, its central finding is that the Consumer Duty has not yet translated into better outcomes for consumers.
The numbers behind that are stark. FCA figures cited in the report put 2025 claims acceptance rates at 62% to 71% for home insurance and 83% to 86% for travel, against 99% for motor, as reported by Insurance Business.
The committee’s diagnosis is about distribution. Comparison sites have driven price-led competition, which has kept cover affordable, but there is little comparable data on value beyond price, especially claims outcomes. Policies are chosen on price, and the gap shows up at the claim.
Insurers pushed back. The chief executives of Aviva, Admiral and NFU Mutual told peers that most declined claims come from uninsurable events or customer choices at the point of sale, not insurer conduct, and warned against prescriptive rules on top of the Duty.
Here is the detail worth sitting with. Both sides can be right and the recommendation still lands. If declines mostly follow choices made at the point of sale, a buyer who could see claims outcomes would choose differently, and price would start carrying information it does not carry now. The committee says that if the industry cannot agree comparable metrics, the FCA should step in and publish a roadmap with timescales.
For home insurers, that would change what competes. Today a policy’s claims record is invisible on a comparison screen and its premium is not. Comparable outcomes would move margin towards wordings and handling that pay more claims, and away from thin cover sold on the headline price. Outsourced claims handling and cash settlement, which the FCA itself has flagged as higher risk, would sit under the same light.
The industry can still define those metrics itself. Waiting for the regulator to do it is the more expensive option.
Sources: House of Lords Financial Services Regulation Committee; Insurance Business.