FCA Partners with Industry to Close UK Protection Insurance Gap

The Financial Conduct Authority (FCA) and its partners have joined forces to improve financial security for millions of people across the UK. While the market is currently working well for consumers who already have protection insurance, a significant portion of the population remains unprotected. Data reveals that around 58% of adults have no life insurance, critical illness cover, or income protection, with 59% of that group having never even considered it. This leaves millions vulnerable in the event of a death in the family, serious illness, or loss of income.

To address this, the FCA is collaborating with industry, government, and consumer groups on several key actions:

• The Money and Pensions Service and the Digital Property Market Steering Group will prompt people to think about protection at key moments, such as becoming a parent or buying or renting a home. The FCA is also exploring how other partners can help put protection on people’s radar when it matters most.
• The Protection Distributors' Group will lead a consumer awareness campaign, targeted at groups who are less likely to take out protection products.
• The Association of Mortgage Intermediaries will lead work to help advisers improve how they discuss protection with their customers.

The initiative follows the FCA’s Pure Protection Market Study and focuses on groups disproportionately unprotected, including renters, the self-employed, gig economy workers, those on lower incomes, and people with pre-existing medical conditions.

Graeme Reynolds, Director of Competition at the FCA, commented:

“Competition in protection insurance works well for existing customers. But we’re working with partners to increase coverage – so that more people are protected when they or their families need it most.”

The FCA is also encouraging greater innovation in the market. It will hold a webinar for firms to address regulatory misunderstandings and will work with the Association of British Insurers to reduce delays in obtaining medical records. Firms are also invited to take part in a TechSprint, with expressions of interest due by 13 November.

Additionally, the FCA published findings on switching, claims experiences, and fair value. While competition is generally healthy, the regulator has reminded firms of their requirements under the Consumer Duty and product governance rules. No new market-wide measures are planned, but the FCA will take action where firms fall short.