FCA seeks industry input to close insurance protection gap
The Financial Conduct Authority has called on the insurance industry to help more consumers access vital protection products. This follows interim findings showing 58 percent of adults lack such cover despite potential benefits.
Bridging the 58 percent protection gap
The Financial Conduct Authority (FCA) has urged the insurance industry to enhance consumer access to pure protection products, which provide crucial financial support in cases of critical illness or death.
The interim findings from its competition review indicate that while the market generally works well for existing policyholders—offering diverse products, reliable claims, and stable costs—a significant 'protection gap' persists.
Specifically, 58 percent of UK adults lack such cover, despite many potentially benefiting.
Research highlights that this gap stems from consumers' lack of awareness regarding their needs and insufficient prompts to consider protection.
Other contributing factors include affordability, misunderstandings about product features, and areas needing improvement in the sales process.
The FCA is actively collaborating with industry and stakeholders to identify further measures to support consumers and close this gap.
Industry collaboration for future improvements
Graeme Reynolds, Director of Competition and interim Director of Insurance at the FCA, emphasized the vital role pure protection products play in helping families manage difficult life experiences.
He stated that while market competition largely works well, many more people could benefit from this protection.
Reynolds affirmed the FCA's commitment to work with the industry to reduce this gap and help consumers navigate their financial lives.
The FCA will further analyze updated 2025 data for its final report and will also consider ways to improve product switching, ensuring any changes clearly benefit the consumer and meet their needs.