The Financial Conduct Authority published a package of retail insurance findings, concluding that recent increases in motor insurance premiums were largely driven by external increases in claims costs rather than higher firm profit, while identifying ongoing shortcomings in claims handling and potential fair value concerns in premium finance. Higher motor claims costs were linked to rising prices for cars, parts, labour and energy, more complex cars and supply chains, higher hire vehicle costs, and significant increases in theft claims and uninsured drivers. Referral fees paid to credit hire firms and claims management companies were associated with slower claims processing and rising costs. In home and travel insurance, the FCA found weak oversight of outsourced services, insufficient management information, high rejection rates for storm damage claims with only 32% of sampled 2024 claims resulting in a payment, and use of cash settlements without sufficient assessment of suitability; it is engaging directly with firms and may take action where needed, while supporting coordinated work with Government, industry and other regulators through the Government’s motor taskforce. Separately, the FCA reported its general insurance pricing reforms are narrowing the price gap between new and renewing customers in motor and home markets, curbing price-walking. An interim update to the premium finance market study found some firms earn much more from monthly instalment arrangements than it costs to provide them. The FCA will explore these concerns in the next phase, seek to address any issues first through the Consumer Duty, and publish a final report by the end of 2025.

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