The FCA has signalled it is actively looking to address issues around claims definitions in the insurance market. Andrew Ruddle, the FCA's interim head of insurance market analysis and policy, has confirmed the regulator is examining how claims definitions affect rejection and acceptance decisions. 

The data problem

The FCA's Value Measures framework requires firms to report annual 'claims' data including acceptance rates. The FCA’s post-implementation review, found that whilst the rules have improved transparency, reporting inconsistencies make comparisons unreliable. The review found that 50% of firms consider the reporting rules unclear.

The acceptance rate data tells an interesting story. Buildings insurance recorded the lowest claims acceptance rate of any general insurance product line in 2025, falling to just 62%, compared with 99% for motor. At individual insurer level, acceptance rates for buildings insurance vary between 45% and 85%, a range that the FCA considers suggests definitional inconsistency on what “claim” is rather than genuine underwriting differences.

Many consider the FCA's own definition of a 'claim' to be too broad, potentially capturing below-excess notifications and coverage enquiries. Industry efforts to agree standardised definitions have stalled. 

The consumer picture

The Which? super-complaint into home and travel insurance brought further scrutiny. The FCA identified specific weaknesses in how firms define storm damage, poor customer communication, and insufficient consumer understanding of policy coverage. 

Nearly one-third of consumers find it difficult to assess the quality of policies, and the FCA has attributed lower acceptance rates in home and travel lines partly to low consumer understanding of what their policy covers.

The FCA's position is clear: policy wordings must be comprehensible to the average consumer, not merely legally compliant.

Practical Implications

For underwriters and policy drafters, the direction of travel is unambiguous:

• Review key defined terms. Terms such as 'storm', 'escape of water', and 'accidental damage' that drive material claims decisions should be checked for both precision and intelligibility. The FCA has already identified storm definitions as a specific area of weakness.
• Establish internal claims definitions. Firms must be able to demonstrate that their definition of what constitutes a reportable claim is clearly documented, consistently applied, and defensible under regulatory scrutiny.
• Align wordings with reporting obligations. How a policy defines covered events and exclusions directly affects how claims are categorised for value measures purposes.
• Consumer Duty raises the stakes. An exclusion that is technically enforceable but routinely misunderstood is now a Consumer Duty risk. The FCA has made clear it treats poor claims governance as a cultural and governance issue.

Conclusion

The FCA's focus on claims definitions reflects converging pressures: persistent acceptance rate disparities, inconsistent reporting, the Which? super-complaint, and Consumer Duty obligations. Firms that proactively review how key policy terms interact with claims decisions and reporting requirements will be better placed when the FCA's next intervention arrives. Those that do not may find their policy language becomes the evidence used against them.