UK’s House of Lords calls for tougher FCA oversight of travel insurance claims

A House of Lords committee has urged the Financial Conduct Authority (FCA) to take stronger action over persistently low claims acceptance rates and poor consumer understanding in the UK’s home and travel insurance markets.

In a report published on 23 October, the Financial Services Regulation Committee said the FCA must accelerate efforts to improve claims handling, policy transparency, and the availability of comparable information on insurance products.

The committee found that home and travel insurance claims acceptance rates remained low compared with other retail insurance products, with consumers frequently discovering limitations or exclusions only when making a claim.

It also warned that competition driven by price comparison websites has encouraged customers to prioritise the cost of premiums over the extent and quality of cover when selecting a provider.

Baroness Noakes, Chair of the committee, said: “Comparison websites have made it easier for people to find cheaper insurance, but the lack of good data on other aspects of product value means that many home and travel policies are chosen on price alone.”

Claims handling under scrutiny

The report highlighted concerns about outsourced claims handling and cash settlements, which the FCA has previously identified as areas presenting a heightened risk of consumer harm.

Although neither practice is inherently detrimental, the committee criticised the regulator for failing to progress further work with firms after identifying the issues in 2025.

It also questioned whether the FCA’s Consumer Duty, introduced for open products in 2023, had delivered sufficient improvements.

The committee recommended clearer expectations for insurers, more consistent reporting of claims outcomes, and stronger enforcement where firms fail to meet regulatory standards.

It also called for standardised insurance value measures, potentially including claims settlement times, to help consumers compare policies beyond price.

The growing use of artificial intelligence to research insurance products was identified as another potential risk, with the committee warning that unregulated AI tools could provide inaccurate or misleading information.

The FCA has been asked to publish a roadmap setting out its planned work on home and travel insurance, including expected delivery dates, and report back to the committee on its progress within 12 months.

Keep on reading: Travel insurance complaints rose by 19.4% in the second half of 2025, according to FCA data. Read more about the rise in travel insurance complaints.