FCA’s anticipated priorities for the insurance market

The FCA has signalled a proactive and assertive approach to regulating the insurance sector. Despite economic challenges, the FCA is determined to press ahead with its strategic goals. Insurers, intermediaries, and brokers can expect heightened regulatory scrutiny around core themes: protecting consumers, ensuring market integrity, and fostering effective competition. 

This article examines the FCA’s anticipated priorities for 2026 and how these key issues may affect firms across the insurance market. 

Consumer Duty and fair value 

The FCA’s Consumer Duty, which came into force for open products in 2023, is expected to be a central pillar of supervision through 2026. The regulator is increasing testing how effectively firms have embedded the duty’s higher standards of customer care. In 2024, the FCA launched multi-firm reviews examining consumer support, including the treatment of vulnerable customers, and overall service quality.

By 2026, insurance firms will be expected to demonstrate that customers are consistently receiving good outcomes across the full product lifecycle, from product design and sales to renewals and claims handling. Insurers must evidence that their products offer fair value, meet consumers’ needs, and do not disadvantage long-standing customers through pricing practices. The FCA continues to assess the effectiveness of the General Insurance Pricing Rules introduced in 2022 and has indicated that it may strengthen or expand pricing interventions if they are not delivering fair outcomes. 

The FCA is also scrutinising customer service standards, particularly in relation to claims handling. Following Which’s super complaint on home insurance claims, the FCA has broadened its focus on improving standards in the home and travel insurance markets. Throughout 2026, the FCA is expected to intensify its work on claims handling by reviewing firms’ customer service arrangements, including their oversight of third-party claims handlers. This work will also examine how insurance products are sold, with a view to improving consumers’ understanding of what their policies do and do not cover. 

Supporting consumers in vulnerable circumstances remains a top FCA priority. By 2026, insurers and brokers are expected to have embedded robust policies to identify and assist vulnerable customers across the customer journey. 

Financial crime and market integrity 

Combating financial crime remains a core FCA priority across all financial services, including insurance. The FCA has highlighted the increasing threat of scams and fraud and continues to focus on reducing the risk of illicit financial flows through regulated firms. Insurers - particularly life insurers and firms handling investments or large payment flows - should expect close scrutiny of their anti-money laundering (AML) and sanctions frameworks. By 2026, insurance firms and intermediaries will be expected to demonstrate effective customer due diligence, proportionate transaction monitoring, and robust sanctions screening. General insurers face distinct fraud risks in underwriting and claims, and the FCA expects strong anti-fraud systems and controls across the sector. 

The regulator is increasingly data-driven in its approach to combating financial crime, investing in technology and analytics to identify higher-risk activity. Insurance firms are likely to face growing pressure to adopt similarly effective tools, proportionate to their risk profile. Advanced data analysis can help insurers identify emerging fraud patterns and strengthen their control frameworks.

The FCA’s message is clear: firms must not become the weak link in the financial system. An insurer or intermediary that fails to prevent money laundering, sanctions breaches, or fraud risks significant enforcement action. Senior managers should therefore keep financial crime controls under regular review, address any weaknesses, and promote a culture of vigilance, supported by ongoing staff training and independent assurance of AML and fraud processes. 

Operational resilience and third-party risk 

Operational resilience remains at the forefront of regulators’ priorities. As we start 2026, the FCA -alongside the PRA and the Bank of England - will continue to focus on how firms are embedding, testing and evidencing their resilience frameworks. Regulatory attention is expected to centre on firms’ ability to prevent, respond to, and recover from operational disruptions, supported by enhanced supervisory scrutiny and evolving incident-reporting expectations. 

Insurers and intermediaries should prepare for more rigorous requirements around incident reporting and heightened expectations when outsourcing critical or important functions. In parallel, regulators are implementing a regime to directly oversee certain critical third-party service providers, including major cloud computing firms. Insurance firms will need to maintain clear mapping of dependencies, regularly test contingency arrangements, and demonstrate that they can continue delivering important business services during severe but plausible disruptions, such as cyber-attacks or major technology failures. 

Cyber security remains a particular area of concern. The FCA has repeatedly warned that cyber-attacks pose a serious and growing threat to the financial services sector. As we move through 2026, firms should expect continued regulatory focus on ICT and cyber risk management, with further supervisory clarification on expectations around governance, incident response, and recovery capabilities. 

Insurers should continue to invest in robust cyber defences and regularly conduct cyber simulation and response testing. Effective management of outsourced partners is also central to operational resilience. The FCA expects firms to exercise close oversight of third-party providers through due diligence, clear contractual provision, and ongoing performance monitoring. Overall, operational resilience is no longer treated as a one-off compliance exercise, but as a continuous, embedded discipline across firms’ operations. 

ESG and sustainable insurance 

Environmental, social and governance (ESG) issues continue to feature prominently on the FCA’s agenda. Within the scope of its statutory objectives, the regulator is seeking to support the UK’s transition to a net-zero economy and to prevent greenwashing in financial services. The FCA has introduced Sustainability Disclosure Requirements (SDR) and investment product labels to improve transparency and ensure firms accurately describe the sustainability characteristics of their products. 

By 2026, if an insurer offers a “green” or climate-friendly policy, it is likely to be expected to meet standards when marketing those products and making sustainability-related claims. The FCA’s anti-greenwashing rule already applies across the industry, requiring that all sustainability-related statements are clear, fair and not misleading. 

Beyond disclosures, the FCA expects insurers to treat climate-related risks as an integral part of business strategy and risk management. General insurers are already grappling with more frequent floods, wildfires, and storms that increase claims costs, requiring pricing models and underwriting approaches to adapt. By 2026, regulators are likely to intensify their scrutiny of how insurers are embedding climate scenario analysis into strategic and operational decision-making. 

At the same time, the drive for sustainability presents opportunities for insurance innovation, including products supporting renewable energy projects or electric vehicles. Brokers and advisers should recognise that clients are increasingly attentive to the ESG characteristics of insurance products. ESG is therefore becoming both a regulatory and commercial imperative, influencing disclosure, governance and product development across the insurance sector. 

Competition and regulatory reform 

The UK is reforming its financial services rulebook post-Brexit, and the FCA has been given a secondary objective to promote the competitiveness of UK markets. In 2026, the regulator will continue to foster a more innovation-friendly and proportionate regulatory environment. One area of reform is the overhaul of legacy EU regulations. For insurers and intermediaries, a notable change is the replacement of the EU’s PRIIPs disclosure regime with a new UK-specific Consumer Investment framework. By 2026, firms offering unit-linked policies or investment-linked annuities are expected to be transitioning to these new disclosure standards, designed to provide customers with clearer information while reducing administrative burdens. 

The competitiveness drive also means regulators are re-examining whether rules appropriately differentiate between retail and wholesale market participants. The government and FCA have indicated they will review insurance-specific regulations to identify areas where requirements can be simplified or tailored for professional markets. 

Another aspect of fostering competition is supporting new entrants and InsurTech innovations. The FCA will continue initiatives such as the Regulatory Sandbox and Innovation Pathways, which allow startups to trial new ideas under regulatory oversight. The FCA will also monitor emerging technologies closely to manage any risks - for example, ensuring that algorithms used in pricing do not produce outcomes that unfairly disadvantage certain customer groups. 

Governance and senior manager accountability 

Good governance remains a fundamental expectation from the FCA. The Senior Managers and Certification Regime (SMCR) will remain a key instrument for enforcing accountability in 2026. The FCA has not hesitated to take enforcement action against both firms and individuals when serious misconduct or control failures occur. If an insurance firm breaches the new Consumer Duty or experiences significant failings in financial crime prevention, the FCA is likely to scrutinise whether senior management took “reasonable steps” to prevent and address the issue. Boards and executives should maintain clear governance processes, regular compliance reporting, and a culture that encourages staff to speak up about potential problems. 

The government has been reviewing the SMCR to identify potential improvements or simplifications. Some adjustments may be implemented by 2026, but the core principles of accountability are expected to remain. 

Beyond formal rules, the FCA places strong emphasis on a healthy corporate culture. Senior leaders set the tone from the top; demonstrating a customer-centric, ethical culture will continue to be just as important as technical compliance. 

Conclusion 

The FCA’s priorities for 2026 reflect a balance of strengthening protections and encouraging progress. 

Insurance firms will be expected to raise their game on customer outcomes whilst bolstering defences against financial crime and operational shocks. At the same time, the regulatory landscape is evolving to become more agile and supportive of innovation. 

Our financial services sector team can support insurance firms navigating this horizon. Insurers, brokers, and intermediaries will need to be proactive: keeping abreast of regulatory developments, investing in compliance and resilience, and embedding a customer-first ethos throughout their operations. By aligning with the FCA’s direction of travel, firms can build a competitive edge in a market that values trust, transparency, and innovation.