The Financial Conduct Authority’s (FCA) latest report into motor, home, and travel insurance claims handling, along with its interim findings on premium finance, has drawn responses from several leading industry voices.
The report highlights rising claims costs, external inflationary pressures, and areas where insurer practices fall short of regulatory expectations. While recognising that many drivers of cost are outside firms’ control, the FCA is pushing for more consistent and consumer-focused claims management.
ABI director general Hannah Gurga (pictured above) said the regulator’s conclusions reinforced the view that increases in motor insurance premiums are primarily due to rising claims costs.
“Ensuring a smooth and stress-free claims process is crucial for customers when going through what can already be incredibly difficult circumstances,” Gurga said. “Our members work hard to achieve this, but we will engage with them and the regulator to understand what improvements can be made in the claims handling journey, to ensure good outcomes for customers and to support trust and confidence in the industry.”
Commenting on the FCA’s review of premium finance, Gurga noted that allowing policyholders to pay in monthly instalments can offer flexibility. She explained that insurers face additional costs in offering this service, including maintaining cover when payments are delayed or missed.
“Our Premium Finance Principles, which we published last year, outline that any charges should be fair, transparent and reflective of the costs that the insurer faces. We’ll continue to work with our members on this matter and engage with the FCA’s review,” she said.
David Sparkes, BIBA’s regulation director, acknowledged the regulator’s findings, noting that while the overall report was seen as constructive, it also pointed to areas requiring further attention.
Sparkes said the FCA’s assessment of the causes behind rising motor premiums was “thorough and helpful,” adding that BIBA welcomed the absence of any proposed rule changes in the motor insurance market.
"To this end we will continue to support the ongoing work of the Motor Insurance Taskforce to identify ways to lower premiums through tackling the causes of claims inflation," he said,
In relation to home insurance, Sparkes noted that further work may be needed to improve customer understanding of cover, particularly with regard to perils such as storm damage and the role of wear and tear exclusions.
"BIBA has previously issued guides on claims which help explain to consumers how home, travel and motor insurance claims are managed, and we will reissue this guidance via our members and add to it, as necessary. We will also continue our interaction with other industry stakeholders to combat fraud and uninsured driving," Sparkles said.
Kathryn Moore, head of non-life at consultancy Broadstone, welcomed the FCA’s recognition of these issues within the wider scope of the government’s motor insurance taskforce and pointed to repair costs, vehicle replacements, theft, and uninsured drivers as relevant pressures.
“It is clear that well-governed, customer-centric claims processes back-up by focussed management information are seen as good practice for all insurers,” Moore said. “The previous work from the FCA in the retail insurance market has evidently had a positive effect in reducing price-walking practises costs for consumers.”
“Alongside a government taskforce and in tandem with the ABI, the efforts of the FCA to continue to support the industry to deliver good outcomes for consumers and build confidence in the market.”
Mohammad Khan, head of general insurance at PwC UK, said the FCA’s updates presented a detailed view of the market. He acknowledged that the pressures on claims costs – driven by inflation and supply chain disruption – require a coordinated response.
“This challenge also presents an opportunity for innovation. By leveraging technology such as automation, data analytics and the latest advances in generative and agentic AI, insurers can streamline claims processing, reduce errors, and improve customer satisfaction. Transparency in claims handling is paramount, fostering trust and demonstrating a genuine commitment to customer well-being,” Khan said.
On pricing, Khan noted that the FCA’s interim observations offer a mixed outlook for consumers.
“While no immediate sweeping changes are expected, we predict the downward trend in motor and home insurance premiums will continue, with home insurance potentially falling by 5% to 7.5% and motor insurance by 2.5% to 5% for the rest of 2025,” Khan said.
Khan said the FCA’s focus on premium finance and claims management suggests further developments are likely.
“Their focus on these areas could lead to greater transparency and fairness for consumers in the long run. Ultimately, addressing these issues head-on will create a more robust and reliable insurance market that benefits both insurers and policyholders,” he said.
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