The Financial Conduct Authority (FCA) has published its first annual Regulatory Priorities report for the insurance sector, outlining a strategic focus on consumer outcomes, market growth, and regulatory simplification. This report is part of a new initiative where the FCA is introducing nine annual sector-specific reports to replace more than 40 previous portfolio letters. These reports are designed to provide a clearer and more consistent way for the regulator to communicate its expectations to firms’ boards and chief executives. A key highlight for the captive industry is the FCA’s commitment to consult on a new regulatory framework for captive insurance alongside the Prudential Regulation Authority (PRA). This move is part of the regulator's broader priority to support growth and innovation, ensuring the UK market remains a globally competitive insurance hub. The regulator intends for this consultation to streamline requirements for captives, reflecting their specific risk profiles compared to retail insurers. Sarah Pritchard, deputy CEO of the FCA, says: “We're committed to being a smarter regulator: predictable, purposeful and proportionate. These new Regulatory Priorities reports replace more than 40 portfolio letters. They attempt to pull together all that we're doing, whether by supervisors or in policy development. A clear, succinct one-stop shop.” For the 2026 period, the FCA’s priorities include improving claims handling and service quality, particularly following investigations into home and travel insurance. The regulator also plans to evaluate the risks and opportunities of artificial intelligence (AI) in insurance internal processes such as underwriting and claims. Additionally, the FCA will conduct a post-implementation review of the Funeral Plan Conduct of Business sourcebook (FPCOBS) and engage with larger insurers to review their financial crime systems and controls. The report notes that these actions aim to reduce the regulatory burden on firms that demonstrate high standards while allowing for faster intervention where harm is identified. Graeme Reynolds, interim director of insurance at the FCA, adds: “Our goal is simple: less intensive attention on firms doing the right thing, and stronger, faster action where harm is greatest.” The FCA confirms it will respond to market events and emerging risks throughout the year, which may necessitate new workstreams not included in the initial report.
