The UK insurance sector still struggles to win public confidence, and regulators say the industry needs to move faster to fix it.
Fresh FCA figures show 66% of consumers report low trust in insurance, placing the sector near the bottom of UK financial services.
Sarah Pritchard, deputy chief executive of the Financial Conduct Authority, said insurers rely too heavily on outdated practices while a steady stream of corporate scandals continues to erode confidence. Innovation exists, she said. Trust doesn’t follow automatically.
Pritchard said good products alone won’t fix the problem. Firms need to bring consumers along, step by step, and stop assuming loyalty comes bundled with cover.
She told delegates trust grows through better experiences, not marketing. It isn’t easy. It’s still achievable.
The regulator has tightened its focus through enforcement of the Consumer Duty, introduced in 2023. Rather than launching new market-wide interventions, the FCA plans to lean harder on fair value requirements. The aim stays speed and measurable outcomes.
That approach already delivered cash back to policyholders. The FCA secured £200 mn in compensation for roughly 270,000 consumers after insurers underpaid claims following vehicle thefts and write-offs.
On Tuesday, the regulator confirmed further action on monthly insurance payments, ensuring fair value for customers who finance premiums. That move saved consumers £157 mn, after more than half of providers reviewed reduced premium finance charges.
Pritchard said the authority will keep pushing transparency around what people buy. The FCA plans to review products for outcome signals and monitor how firms handle vulnerable customers.
According to Beinsure, enforcement tied to outcomes rather than rule volume marks a shift in supervisory tone.
Beyond trust, the regulator sees a widening protection gap. Millions remain uninsured despite available products, leaving households exposed to injury or property loss. Insurers accepted 98% of insurance claims and paid £5.4 bn.
FCA research shows 26% of people hold no insurance at all. Another 58% lack pure protection products such as life insurance or income protection. Industry figures say pricing isn’t the only issue.
The average life policy costs about £29.75 per month. Awareness gaps and limited access to regulated advice weigh heavily.
Pritchard described the protection gap as significant and said the FCA plans to work with insurers to close it.
At the same time, the regulator signalled relief for wholesale insurance firms. These specialist brokers place higher-risk policies rarely offered in retail markets.
Pritchard said the FCA intends to strip out disproportionate regulatory burdens, including unnecessary data returns and filings. Firms with consistent compliance records should expect lighter supervision.
She closed with a warning and an invitation. The FCA wants insurers to succeed. Innovation matters. Consumer confidence matters more. Firms should engage early, stay open, and bring customers with them, not after the fact.
