Last year, the FCA announced it was launching a Market Study into the Pure Protection market. For many advisers, that understandably raised questions; a market study is designed to assess how well a market is working for consumers, and regulatory attention can often signal change ahead.
In January, the FCA published its interim findings, with a final report expected sometime in Q3 2026. Overall, the message should be reassuring, but it’ s not a reason for firms to take their foot off the pedal when it comes to quality.
A market that is broadly working
One of the most important conclusions from the interim report, is that the FCA believes the protection market is functioning well for consumers. The data paints a picture of a market that is competitive, well distributed and largely delivering good outcomes.
The FCA believes the protection market is functioning well for consumers
Switching and commission: A familiar theme
That said, the FCA has identified areas it wants to explore further, particularly around switching behaviour. They’ re concerned that a small number of intermediaries may be encouraging unnecessary switching to generate repeat commission.
Importantly, the FCA’ s own data shows this behaviour is not widespread. However, it wants better information and more consistent reporting to ensure switching decisions are genuinely aligned to customer need.
Ahead of the final report, the FCA plans to work with the industry to develop more proportionate and effective switching metrics. For most firms, this reinforces what should already be in place; clear rationale, strong file notes and robust sales quality oversight.
Supporting clients beyond the point of sale
The FCA highlighted several encouraging indicators:
• A wide range of protection products across multiple distribution channels
• High claims acceptance rates
• Claims ratios generally above 50 %
• Stable new business premium levels
• Low upheld FOS complaints( 515 upheld complaints out of 13.8 million policies in force in 2024)
• Intermediaries accounting for around 80 % of protection sales
• The majority of sales being advised and based on individual needs
On the back of this, the FCA has been clear that it does not currently envisage any significant market-wide interventions. That is a strong endorsement of advised protection and the role advisers play.
Another key focus of the study was the claims experience, particularly what happens long before a claim is ever made. The FCA observed that some firms go further than others, at point of sale to support future claims, for example, placing policies in trust or encouraging clients to put wills and powers of attorney in place. While these activities sit outside regulated advice, the FCA views them as good practice that can materially improve outcomes when a claim occurs.
The regulator has been clear that the more widespread these practices become, the better outcomes consumers are likely to experience. This aligns closely with Consumer Duty expectations and may be an area where guidance or further emphasis follows.
Income protection and claims ratios
The FCA also highlighted that income protection has a lower claims ratio than other pure protection products, at around 40 %. Insurers point to the nature of IP, including the need for higher margins to manage long term claims volatility.
March 2026 | 7