The Financial Conduct Authority (FCA) must move faster to improve consumers’ understanding of home and travel insurance and to tackle poor claims handling, according to a House of Lords committee.
The cross-party Financial Services Regulation Committee’s report, Home and travel insurance regulation: more for the FCA to do, published today, found that the FCA’s Consumer Duty had not yet led to better outcomes for consumers. It called on the regulator to set out a roadmap with clear timescales.
The committee found home and travel insurance had low claims acceptance rates compared with other retail insurance products. The report cited FCA figures showing that in 2025, claims acceptance rates ranged from 62% to 71% for home insurance and 83% to 86% for travel insurance, compared with 99% for motor.
It said both products are complex and consumer understanding is poor, despite the Consumer Duty’s requirement for firms to support it. The consequences often only become clear when a claim is made. Policies bought on price rather than cover, and confusion over what is and is not covered, both contribute to high rates of declined claims.
“It is concerning that many of these problems around consumer understanding and comparable data are well-known among industry and the FCA, but that significant progress has not yet been made,” said Baroness Noakes, chairman of the committee.
The committee said price comparison websites had driven intense price competition, helping consumers find affordable cover but shifting the focus to price over overall value.
It also found a lack of comparable data on elements of value other than price, particularly claims outcomes. That makes it harder for consumers, and for comparison sites, to compare products properly. If the industry cannot agree comparable metrics, the FCA should step in to ensure outcomes data is widely available, the committee said.
The FCA has acknowledged the need for further work on higher-risk claims practices, including outsourced claims handling and cash settlements, and the committee said it should set out how it will address poor claims handling. The report also raised concerns about consumers increasingly using AI, which the FCA does not regulate, to research insurance.
The inquiry, launched in May, heard from the FCA, the Financial Ombudsman Service and industry leaders. At its first hearing in June, witnesses questioned whether FCA enforcement had kept pace with evidence of poor claims outcomes.
Insurers pushed back. The chief executives of Aviva, Admiral and NFU Mutual told peers that most declined claims result from uninsurable events or customer choices at the point of sale, rather than insurer conduct, and warned against new prescriptive rules on top of the Consumer Duty.
For brokers, the report sharpens the focus on the point of sale. If the committee is right that buying on price alone drives declined claims, intermediaries who explain cover, limits and exclusions properly are part of the solution. Brokers should expect the FCA to look harder at how firms evidence consumer understanding under the Consumer Duty.
Comparable claims data could also change the market. If the FCA requires insurers to publish claims outcomes, brokers would gain a powerful tool for comparing value, and insurers with weak acceptance rates would face more pressure.
Claims handling oversight is the third area to watch. Brokers whose insurer partners outsource claims will want reassurance that those arrangements meet the FCA’s expectations, particularly as the committee presses the regulator for a timetable.
