The FCA isn’t creating friction in insurance - it’s exposing it!

The FCA’s latest Regulatory Priorities highlight key pressure points across the insurance industry.

This article explores what those priorities reveal about existing friction in claims handling, delegated authority, and customer outcomes, and what it means for brokers.

A shift in FCA insurance regulation and expectations

The FCA’s 2026 Regulatory Priorities report marks a move towards a more consolidated annual approach, replacing multiple portfolio letters with a single view of expectations.

On the surface, that’s a structural change.

In practice, it signals something broader:
a more consistent and visible framework for how the FCA expects firms to deliver, particularly when it comes to consumer outcomes.

This isn’t new friction.
It’s newly visible friction.

Where friction sits in insurance operations today

The themes within the report closely mirror some of the most persistent challenges across the industry.

1. Claims handling: expectation vs reality

Claims handling remains a key area of focus for the FCA, particularly in relation to service quality and customer outcomes.

Industry commentary, including Insurance Business, has highlighted claims and delegated authority models as areas coming under increased scrutiny.

This reflects a broader challenge:

• customers expect fast, fair, transparent claims experiences

• but delivery often depends on multiple parties across the value chain

That disconnect is where friction becomes most visible.

2. Oversight and delegated authority: control vs visibility

The spotlight on delegated authority introduces another layer of tension.

As noted in industry coverage, including Insurance Business, there is increasing attention on how responsibility is managed when activities, particularly claims, are outsourced or delegated.

This raises important operational questions:

• who owns the outcome?

• how visible is the process end-to-end?

Where that visibility is limited, friction tends to follow.

3. Customer understanding: complexity vs clarity

The FCA continues to emphasise the importance of customers properly understanding their cover. Insurance products are inherently complex, but expectations are shifting.

If customers don’t clearly understand:

• what they’re buying

• what’s covered

• what isn’t

then issues often surface later, particularly at the point of claim. Friction doesn’t start at the claim, it starts much earlier.

4. Fair value and Consumer Duty: price vs perceived benefit

Fair value remains a central theme under Consumer Duty, shaping how firms are expected to evidence customer outcomes.

This creates a familiar tension:

• competitive pricing
  vs

• clearly evidenced value

It’s no longer enough for products to be competitively priced —
they need to deliver in a way that is visible and justifiable.

5. Innovation and regulation: speed vs control

Alongside increased scrutiny, the FCA has also indicated support for innovation and a more competitive market.

That creates a dual pressure:

• move faster

• while maintaining strong oversight and governance

For many firms, this is where operational complexity, and therefore friction begins to build.

So what’s actually changing?

Not necessarily the problems themselves —
but the expectation to demonstrate how they are being addressed.

The direction of travel is clear:

• outcomes over processes

• evidence over assumption

• visibility over opacity

There is increasing expectation for firms to demonstrate what customers were promised, not just in theory, but in practice.

Key takeaway

The FCA’s latest priorities don’t introduce new challenges - they highlight where existing gaps in claims, oversight, and customer understanding are becoming more visible.

For brokers, the focus is shifting from simply meeting requirements to demonstrating how outcomes are delivered in practice.

Final thought

It’s easy to view regulation as something that creates pressure on the industry.

But the FCA’s latest priorities suggest something slightly different.

They are less about introducing new demands, and more about bringing existing gaps into sharper focus.

And in doing so, they highlight a simple reality:

The real challenge isn’t regulation itself -
it’s the friction already embedded in how the industry operates.

Closing

As expectations around outcomes, visibility, and accountability continue to increase, many brokers are re-evaluating how they manage and evidence their day-to-day operations.

At BrokerCentral, we see this shift playing out in how firms approach data, oversight, and operational clarity, not just to respond to regulatory pressure, but to address the friction already built into the industry.