The FCA’s growing focus on Consumer Understanding in the home and travel insurance markets should prompt insurers to look beyond the wording of policies and customer communications when assessing whether consumers genuinely understand the cover they are buying.
As part of its response to the Which? super-complaint into home and travel insurance, the FCA has confirmed that it is extending its work to examine how firms in these markets are meeting the Consumer Understanding outcome of the Consumer Duty. It has also made clear that customer outcomes will continue to feature in supervisory engagement with firms.
That matters because consumer understanding is ultimately about more than whether information has been presented clearly.
Insurers can test communications, review policy documentation and assess whether key exclusions and limits are sufficiently prominent. But the outcomes customers experience when they come to use a product can provide another important indication of whether expectations and reality are aligned.
This is particularly relevant when it comes to claims.
If significant numbers of customers are making claims that fall outside the scope of their cover, or if certain products consistently generate high levels of complaints when claims are declined, firms should be asking why.
That does not mean a low claims acceptance rate automatically indicates poor consumer understanding. There can be many legitimate reasons for variation between different products and providers, and no single measure can provide a complete picture of customer outcomes.
But these measures can provide important signals about where further investigation is required.
Home insurance remains firmly in focus
The latest FCA Value Measures demonstrate why this matters.
Buildings insurance recorded the lowest aggregate claims acceptance rate of any product category in 2025 at 62%, down from 63% a year earlier. The acceptance rate for combined buildings and contents insurance was 71%, while contents-only cover also stood at 71%.
Complaint rates were also among the highest in the market, with 13% of buildings insurance claims and 12% of combined buildings and contents claims resulting in a complaint.
There is also significant variation beneath those market averages. Some home insurers report considerably higher acceptance rates than the wider market, highlighting the importance of understanding how outcomes compare between individual providers rather than relying solely on aggregate figures.
Travel insurance presents a somewhat different picture. Claims acceptance rates for 2025 ranged from 83% for standalone single-trip policies to 86% for annual European cover. However, claims complaint rates increased across each of the three main travel insurance categories during the year.
None of these figures prove that customers are misunderstanding their policies.
They do, however, provide evidence that can help insurers identify products, customer journeys or areas of cover where further analysis may be warranted.
Joining the data together
The more significant opportunity is therefore to stop looking at each source of conduct data in isolation.
Acceptance rates can tell firms something about how frequently claims are being paid. Claims complaint rates add another layer by showing how often the claims process results in dissatisfaction. Financial Ombudsman Service complaints can provide further evidence about the nature of disputes and whether complaints subsequently referred to the Ombudsman are upheld.
Taken together, these measures can provide a much richer picture of how a product is performing for customers.
The FCA itself appears to be moving in this direction.
Its 2026/27 work programme says its response to the Which? super-complaint will include analysing how different sales processes affect consumer outcomes, exploring ways to improve consumers’ understanding of their cover and considering how claims outcomes are captured through its review of the Value Measures regime.
Meanwhile, the FCA’s recently completed post-implementation review of Value Measures concluded that the regime has improved transparency and helped firms meet fair-value requirements, while also identifying inconsistencies in reporting that make comparison more difficult. A wider consultation on the Value Measures rules is expected during the first half of 2027.
This creates an opportunity to think more broadly about the role that outcomes data can play under the Consumer Duty.
From reporting outcomes to understanding them
For product governance teams, the challenge should not simply be to demonstrate that data has been collected or that individual Consumer Duty outcomes have been considered separately.
The greater value comes from interrogating what that data is saying.
How does a product’s claims acceptance rate compare with its peers? Are complaint levels moving in the same direction? Are there particular providers, products or customer groups experiencing materially different outcomes? And where there are outliers, can those differences be explained?
This type of benchmarking does not replace firms’ own customer research, communication testing or product governance processes. But it can provide an independent evidence base to help firms identify where they should be looking more closely.
That is particularly important as the FCA increasingly relies on the Consumer Duty rather than introducing additional prescriptive rules.
The regulator has made clear that it expects firms to monitor and demonstrate the outcomes they are delivering rather than simply evidence compliance with a particular process. For home and travel insurers, Consumer Understanding therefore cannot be treated purely as a question of whether the right information was put in front of the customer.
The outcomes customers experience after purchasing the product matter too.
And by bringing together claims, complaints, Value Measures and wider customer-outcome data, firms can move beyond simply reporting those outcomes towards understanding what is driving them – and where action may be required.
Insurance DataLab brings together FCA Value Measures, Financial Ombudsman Service complaints and wider conduct and performance data at insurer and product level, enabling firms to independently benchmark customer outcomes against the wider market and identify areas requiring further investigation.
To find out more about how Insurance DataLab can support product governance, Consumer Duty monitoring and fair-value assessments, get in touch to arrange a demo.