Simon Glairy brings decades of experience in risk assessment and insurance technology to the table, making him a primary voice in the ongoing dialogue between regulators and the industry. In light of recent scrutiny from the Financial Conduct Authority (FCA), Glairy offers a deep dive into the systemic issues currently plaguing home and travel insurance sectors—lines of business that have come under fire for surprisingly low claims acceptance rates. We explore the fallout from the high-profile Which? super-complaint, the pitfalls of outsourced claims management, and the urgent need for transparency to restore consumer trust when the “rubber hits the road.”
How do you interpret the FCA’s recent focus on the discrepancy between home and travel insurance claims versus other lines of business?
It’s a wake-up call that many in the industry saw coming, but the intensity of the FCA’s warning really underscores the gravity of the situation. While it’s true that the specific perils involved in home and travel—things like unpredictable weather damage or complex medical emergencies abroad—naturally lead to more nuanced claims, the regulator isn’t accepting that as a catch-all excuse anymore. They’ve signaled a deep-seated concern that these products are consistently yielding poorer customer experiences compared to motor or life insurance. When we look at the data, the gap isn’t just a statistical anomaly; it reflects a fundamental friction in how these policies are structured and explained to the person holding the contract. The FCA is now actively investigating why these sectors are lagging, and for insurers, this means the era of hiding behind “complex risks” is effectively over.
The super-complaint submitted by Which? in September 2025 seems to have been a major catalyst for this regulatory movement. What specific failures did it highlight that should worry the industry?
That super-complaint acted as a mirror, and the reflection wasn’t particularly flattering for the insurance sector. It pointed to a systemic lack of transparency that leaves consumers feeling blindsided when they are at their most vulnerable. One of the most damning aspects highlighted was the sheer volume of claims being rejected due to terms and exclusions that the average policyholder simply didn’t understand or even know existed. It’s a gut-punch for a family to find out their “comprehensive” travel cover has a loophole the size of a plane hanger because they didn’t decipher a three-page exclusion clause. The complaint forced the regulator to acknowledge that “vital protection” is only vital if it actually pays out when disaster strikes, and right now, there’s a perceived disconnect between the promise sold and the reality delivered.
The FCA identified weak oversight of outsourced claims operations as a primary concern. Why has this become such a significant stumbling block for firms?
Outsourcing can be a double-edged sword; while it offers scale, it often leads to a dangerous dilution of quality and empathy in the claims process. When an insurer hands off its claims handling to a third party, they often lose sight of the management information and the raw data that tells the story of the customer journey. We’re seeing instances where oversight is so thin that claims aren’t being handled with the promptness or fairness that the FCA—and the consumers—rightfully expect. It’s not just about the final decision on a claim; it’s about the tone of the interaction and the efficiency of the workflow, both of which suffer when the parent firm isn’t interrogating the data or monitoring the management information with enough rigor. If you don’t own the process, you can’t guarantee the outcome, and that’s a risk the regulator is no longer willing to overlook.
Beyond outsourcing, there are concerns about internal controls, specifically regarding cash settlements and data interrogation. What needs to change in the back-office environment?
The back-office needs to stop treating data as a passive record and start using it as a diagnostic tool. The FCA’s mention of cash settlements is particularly telling because it suggests that some firms are taking the “path of least resistance” rather than ensuring the settlement is truly fair and sufficient for the consumer’s needs. We need to see a shift toward more robust internal controls where every settlement is cross-referenced against the actual loss and the intended outcome of the policy. There is currently a lack of interrogation of data within many firms; they have the numbers, but they aren’t asking the hard questions about why certain demographics or claim types are failing. Strengthening these controls means creating a feedback loop where claims data informs product design, ensuring we aren’t just repeating the same mistakes under the guise of “standard procedure.”
How much of this problem stems from the distribution channels, and does the way a policy is sold directly impact the likelihood of a claim being accepted?
This is where the “rubber hits the road,” as David Otudeko from the ABI would put it. The distribution channel is the first point of failure if it prioritizes a quick sale over genuine consumer understanding. The regulator is currently examining whether certain channels—perhaps those focused solely on price comparison or high-speed digital transactions—are contributing to the lower acceptance rates we see today. If a consumer isn’t properly walked through what is covered and what is excluded at the point of sale, they will inevitably feel cheated when a claim is denied later. We have to ask ourselves: are we selling a product, or are we selling a promise? If the channel doesn’t facilitate a deep understanding of policy terms, then the product itself is essentially flawed from the moment it’s purchased.
With the Consumer Duty requirements now in full force, what specific actions should insurers be taking to demonstrate they are delivering good outcomes?
The shift under Consumer Duty is massive because it moves the goalposts from “did we follow the rules?” to “did the customer actually benefit?” Insurers need to be proactively testing consumer understanding—not just by ticking a box, but by using working groups and real-world testing to see if people actually grasp the terms. This involves a three-pronged approach: improving clarity in policy wording, ensuring claims are handled with absolute transparency and speed, and maintaining a relentless focus on monitoring outcomes. If the data shows a spike in rejections for a specific travel product, the firm shouldn’t wait for a podcast release or a regulatory letter; they should be investigating the cause and adjusting the product or the sales process immediately. It’s about being a participant in the customer’s protection rather than just a distant biller.
What is your forecast for insurance regulation?
I expect we will see a significant tightening of the screws, where the FCA moves from warning shots to tangible enforcement actions against firms that fail to bridge the “understanding gap” by the time the next podcast focuses on these priorities on May 20. The industry is moving toward a “radical transparency” model where insurers will have to publicly justify their acceptance rates and prove that their distribution channels aren’t misleading the public. We are likely to see the regulator get to the heart of where issues arise in delegated authority arrangements and remuneration structures. For those who embrace this change by investing in better oversight and clearer communication, it’s an opportunity to rebuild trust; for those who resist, the regulatory and reputational costs will be immense.
