Financial Conduct Authority has issued its first annual Regulatory Priorities report for the insurance sector, replacing more than 40 portfolio letters with a consolidated framework aimed at boards and chief executives.
The regulator will publish 9 sector-specific reports each year. The shift is designed to clarify expectations and align supervisory and policy messaging under a single structure.
Deputy CEO Sarah Pritchard said the objective is a predictable and proportionate approach, delivered through a concise, central reference point.
For insurers operating captives, the report signals structural change. The FCA plans to consult on a revised regulatory framework for captive insurance in coordination with the Prudential Regulation Authority.
The consultation aims to tailor requirements to captive risk profiles, which differ from retail insurers, and to reinforce the UK’s position as a competitive insurance domicile.
Growth and innovation sit alongside conduct oversight in the 2026 agenda. The FCA will review claims handling standards and service quality, following recent scrutiny of home and travel insurance practices.
According to Beinsure analysts, claims performance remains a pressure point under the Consumer Duty regime, especially where service delays translate into measurable consumer harm.
The regulator will also assess the risks and opportunities associated with artificial intelligence in underwriting and claims operations.
Internal automation and decision support tools will receive attention, with governance expectations likely tied to explainability and control frameworks.
Further work includes a post-implementation review of the Funeral Plan Conduct of Business sourcebook and engagement with larger insurers on financial crime controls.
Firms demonstrating strong systems and consumer outcomes may face reduced supervisory intensity. Where harm surfaces, intervention will accelerate.
Graeme Reynolds, interim director of insurance at the FCA, said the approach centers on proportionate oversight, with less intensive focus on compliant firms and faster action where risk to consumers rises.
Our goal is simple: less intensive attention on firms doing the right thing, and stronger, faster action where harm is greatest.
Graeme Reynolds, interim director of insurance at the FCA
The FCA noted it will adjust priorities in response to emerging risks and market events throughout the year, signaling flexibility within the new reporting model.
