Encouragingly, the FCA has observed indicators that claims ratios are improving and has confirmed it will keep this area under review rather than intervening at this stage.
Loaded premiums, indemnity periods and value
The FCA also reviewed loaded premiums and product bias as part of the study. At this stage, it does not intend to take action on loaded premiums, although it has stated it would be concerned if higher premiums were charged without clear justification.
Personally, this was one area where I expected the FCA to go further. In a Consumer Duty environment, where advisers must evidence fair value and suitability over time, clearer guidance on loaded premiums would have helped firms benchmark their approach and reduce uncertainty.
I was also surprised to see limited focus on indemnity periods, particularly the continued use of shorter term cover such as two year indemnity, where longer options may be more appropriate for many clients. Shorter indemnity periods absolutely have a place, especially where affordability is genuinely constrained, but they can materially affect outcomes if not positioned, reviewed and documented correctly.
Given the FCA’ s emphasis on long term suitability and value, this feels like an area that may attract more attention in the final report.
Given the FCA’ s emphasis on long term suitability and value, this feels like an area that may attract more attention in the final report.
Closing the protection gap
One of the most important themes in the interim findings is the protection gap, particularly for vulnerable or harder to insure consumers.
The FCA’ s research suggests the gap exists largely because:
• Consumers aren’ t aware of their protection needs
• They aren’ t prompted to consider protection at the right moments
• Misconceptions exist around cost and suitability
• There is friction in the sales process, especially for clients with complex health histories
What happens next?
The FCA has encouraged firms to consider using nudges or trigger points at key life events, such as moving home or starting a family. It has also floated the concept of Targeted Support for protection products – similar to proposals in pensions and investments. Any move here would require significant regulatory change, but it is clearly an area to watch.
The FCA plans to run stakeholder workshops in Spring 2026, with the final report due in Q3 2026. Feedback on the interim findings is invited by 31 March 2026.
While it’ s welcome that no major interventions are planned, this shouldn’ t be seen as permission to relax standards. If anything, the message is that the market works because advisers are largely doing the right things – and that needs to continue.
8 | Protection Adviser Online