Home and travel claims: how to prepare for further FCA activity

February 2026

On 18 December 2025, the FCA published its response to the Which? Super complaint, which raised urgent concerns about poor consumer outcomes in the home and travel insurance markets. Whilst the FCA has decided not to launch a market study or revise consumer protection rules, its market data indicates that firms must do more to meet the standards of Consumer Duty. The FCA will take forward further work across key areas, consistent with its Consumer Duty Focus Areas published in late 2025.

Having already been active in the home and travel claims space, the FCA is expanding its work to focus on:

• outsourcing and claims supply chain management;
• value measures reporting;
• impact of sales processes on customer outcomes;
• improving customer understanding of key issues.

This article sets out the FCA’s key focus areas for insurers and intermediaries over the coming months, and the steps firms can take now to address the regulators’ concerns.

The FCA’s forthcoming activity in the market falls into three areas: claims handling, sales processes and the application of rules and laws.

The FCA has commenced two enforcement investigations into firms’ claims handling, initiated three skilled person reviews and required three firms to strengthen their controls. This demonstrates that claims handling continues to be an active focus for FCA supervisory teams.

The FCA has also asked several home insurers to review their handling of storm damage claims, particularly regarding claim walkaways and the use of cash settlements.

Further FCA Work:

1. Reviewing outsourcing oversight (Q2/3 2026)
   • The FCA will carry out further diagnostic work on delegated claims handling authority models and remuneration arrangements with outsourced claims providers. This work, originally scoped to focus on Managing General Agents (MGAs), has been broadened to also cover other outsourced and delegated authority models.
   • This will include consideration of the adequacy of firms’ oversight of claims fulfilment providers, such as builders and medical assistance providers.
      
2. Improving service quality (Q2/3 2026)
   • The FCA will use existing data to understand the nature, scale and severity of consumer harm arising from poor service quality and their underlying causes.
   • This work will cover all personal lines products, with a particular focus on home and travel markets.
      
3. Continue working with the Association of British Insurers (ABI) to improve understanding of storm claims, cash settlements and effective governance and oversight
   • The FCA will continue to work with industry stakeholders to clarify its expectations on these topics.
      
4. Improving transparency of claims performance through value measures data
   • As part of the FCA’s ongoing post-implementation review of value measures data, it will examine inconsistencies and challenges in the data and publish its findings by the summer.

The FCA, having previously provided feedback on sales journeys to the four largest price comparison websites, will now further analyse how sales processes affect customer outcomes. The aim is to understand how market dynamics may lead to customer harm by assessing how customer outcomes vary across sales route used - whether through price comparison websites, direct channels or other intermediaries.

The FCA states that data collated by Which?, together with persistently lower claims acceptance rates for home and travel insurance, shows a gap in consumer understanding - which only becomes apparent at the point of claim.

Further FCA Work:

1. Analysing the effect of sales processes on customer outcomes (Q1 2026)
   • The FCA will undertake a targeted analysis of the relationship between sales processes, consumer understanding and claims outcomes. Depending on the results of this analysis, further and broader work may be undertaken.
   • The FCA will continue to work with price comparison websites to address feedback around consumer understanding throughout sales journeys.
      
2. Supporting firms in meeting the consumer understanding outcome (Q2 2026)
   • The FCA will expand on its cross-sector work to review how the market has approached consumer understanding. This will specifically include the home and travel insurance markets.
      
3. Working with industry to address consumer understanding issues in the home and travel markets
   • The FCA, industry stakeholders and consumer groups will come together in a working group to identify and test solutions to the challenges consumers face in the home and travel sectors.

Application of rules and law

The FCA has used its existing powers to require several firms to take action where it has deemed appropriate but has not commenced a market study to review how effectively the home and travel insurance sectors are operating for customers.

The FCA will also consult in Q1 2026 to reflect the Digital Markets, Competition and Consumers Act in its Handbook.

• Alignment with FCA areas of good practice: Firms should assess their alignment to the FCA’s areas of good practice in claims handling and implement improvements where needed.
  
• Outsourcing: Ahead of the FCA’s planned further work this year, firms should ensure that their claims outsourcing - including delegated authority arrangements - provide good outcomes for customers. There should also be an appropriate level of oversight and control over outsourced claims handling and claim fulfilment providers.
  
• Use of cash settlements: Firms should ensure they have a clear approach for determining when it may not be appropriate to offer customers a cash settlement and instead take responsibility for arranging repairs.
  
• Consumer understanding approach: Firms should review their approach to ensuring sales journeys provide consumers with the right information to make informed decisions.
  
• Consumer understanding monitoring: Both insurers and intermediaries should ensure they have a robust approach to monitoring for signs of poor consumer understanding across each sales channel and can take prompt action when concerns are identified. 

With an array of further analysis and activity expected from the regulator in the first half of 2026, KPMG in the UK can support firms to prepare for upcoming information requests and to meet regulatory expectations:

• Claims handling health check: A short, desk-based review assessing how well your claims handling framework aligns with the FCA’s areas of good practice and broader regulatory principles, identifying areas for improvement. This may be particularly useful for firms that were not part of the FCA’s initial sample.
  
  
• Claims outsourcing: A key focus area for the FCA is the quality of customer outcomes where claims are outsourced. KPMG has significant experience supporting firms with implementing and enhancing oversight and control frameworks for overseeing outsourcers. Including support on:
  • Clarity of accountability.
  • Contractual and commercial framework.
  • Remuneration and incentives.
  • Policies, control and oversight.
  • Training and competence management.
  • Management information and monitoring.
     
• Sales journey support:
  • Support in enhancing product oversight and governance approach so that target markets and customer needs are clearly defined and understood.
  • Sales journey mapping and review; map end-to end journeys and identify friction points, complexity, or other drivers of poor customer understanding; and
  • Testing sales journeys and supporting customer literature for ease of understanding and accessibility.
     
• Outcomes testing framework and approach to customer outcomes: Supporting the development of a holistic outcomes testing framework across the customer lifecycle. This will enhance management’s view of customer outcomes at all stages of the lifecycle.