Amendments to rules on travel insurance signposting system for UK consumers
From 1 January next year, key rules around travel insurance sales will come into effect
The Financial Conduct Authority (FCA) published Consultation Paper CP24/26 in December 2024 to propose updates to its 2021 rules governing travel insurance signposting for customers with pre-existing medical conditions (PEMCs). The review conducted in April 2024 showed that the original rules had had a positive effect by directing consumers with PEMCs to specialist providers via directories managed by the Money and Pensions Service (MaPS) and the British Insurance Brokers’ Association (BIBA). However, the review also found inefficiencies, such as ‘brand stacking’, where firms appeared multiple times under different brand names, offering little benefit to consumers and creating administrative burdens.
The proposed amendments, said the FCA, aimed to improve consumer access, simplify administrative processes, and maintain effective competition within the travel insurance market. The key rule changes, effective from 1 January 2026, affect all firms offering retail travel insurance, including those based in Gibraltar.
Key proposals and outcomes
Raising the medical condition premium trigger
The FCA proposed raising the £100 trigger for signposting consumers to specialist directories to reflect inflation and increased risk and medical costs. After consultation, where many respondents found the £175 proposed threshold too low, the FCA decided to set the trigger at £200. This adjustment is intended to ensure that only consumers with more serious PEMCs are signposted, reducing unnecessary referrals and administrative burden. The £100 threshold, unchanged since 2021, was deemed outdated given rising premiums.
Future-proofing the trigger amount
To maintain relevance, the trigger will now be updated every five years based on changes in the Consumer Prices Index (CPI). Although some respondents advocated for more frequent revisions tied to medical cost trends, the FCA concluded that the five-year CPI-based adjustment balances simplicity and effectiveness without adding undue costs for firms.
Firm-set thresholds
The FCA decided not to allow firms to set lower internal thresholds for signposting, following strong feedback that such flexibility could confuse consumers and cause inconsistency across the industry. Stakeholders preferred a uniform standard for clarity and fairness.
Limiting directory entries
The FCA confirmed it would restrict directory entries to one per firm, eliminating brand stacking. Although some argued that different brands might serve distinct consumer needs, the FCA found that most firms used the same medical screening systems and underwriting processes, so multiple listings offered minimal added value.
Rationale and impact
According to the FCA’s Handbook Notice in which the changes were published, these amendments “align with the FCA’s statutory objectives of ensuring consumer protection, promoting fair competition, and enhancing trust in the travel insurance market”. It is hoped that the changes will improve access to appropriate travel insurance for consumers with serious PEMCs, while at the same time minimising excessive or irrelevant signposting for those with mild conditions.
A cost-benefit analysis under the Financial Services and Markets Act (FSMA) found no material increase in costs to firms, and equality and diversity assessments indicated no adverse impact on protected groups. Environmental, social, and governance (ESG) considerations were deemed not directly relevant.
ITIJ spoke to David Allison, Head of Intermediary Consultancy South for Insurance Compliance Services, about the changes from the FCA. He gave his opinion: "
This is all just a bit of tinkering around the edges. The FCA's updates don't address the fundamental issues inherent in the way the signposting rules operate, which was a missed opportunity. There's often a massive difference between premiums for a single trip policy covering Europe, and an annual multi-trip with worldwide cover. Yet the same medical premium trigger-point still applies across the board. Maybe the FCA felt it was just too complicated to approach any other way. But disappointingly, only five organisations (BIBA, plus four insurance intermediaries) are listed as having provided feedback to the FCA's proposals, so maybe the regulator assumed that hardly anyone was that bothered. (Maybe more DID give feedback, but didn’t consent to their names being published?)
And using the CPI to future-proof the trigger-point ignores what is actually happening in terms of medical inflation, including the effects of continuing advances in treatment, which don’t come cheap.
Although not a change to the FCA rulebook as such, the restriction in the directories to one brand per authorised firm does make sense to me, although I guess not everyone will be happy with it. However a firm listed in the directory may well have a number of products they can offer the consumer in any case, once they’ve got them through the door. So not all is lost.
I’m puzzled as to why it took the FCA so long to confirm these rather unexciting changes, after such scant feedback to its proposals which it published way back in December 2024. Maybe a lot more thought went into it than I’ve given the FCA credit for, and it came to the ultimate conclusion that it was best to maintain the status quo, with a couple of tweaks here and there."