Abgalis Limited – Written Evidence (CIM0004)
WRITTEN EVIDENCE — COVERING SUMMARY
House of Lords Financial Services Regulation Committee
Inquiry into the regulation of the consumer insurance market
Submitted by Abgalis Limited | June 2026
This is a two-page summary of the written evidence submitted by Abgalis Limited, a United Kingdom ERM and climate-risk analytics company. The full submission addresses each of the Committee's eight questions, compares the United Kingdom with the European Union and selected member states throughout, and sets out twenty-one recommendations. Abgalis Limited has a commercial interest in how insurers assess and price risk; it is declared in full in the submission, which is nonetheless an independent, evidence-based assessment.
Conduct regulation of home and travel insurance has improved markedly over the last five years; the General Insurance Pricing Practices reforms and the Consumer Duty are genuine gains. But the framework is built around the conduct of firms toward the customers they already have, and is largely silent on two structural questions: whether insurance stays available and affordable as risk-based pricing becomes ever more granular, and whether the risk and value judgements now made by increasingly automated systems can be seen and contested. The consequences are already visible — around one in five UK households holds no home insurance, Flood Re is due to close in 2039 with no successor, and roughly 95 per cent of insurers already use AI. As climate change and artificial intelligence advance, these gaps will widen. The United Kingdom leads Europe on conduct regulation but lags it on structural protection: France and Spain operate permanent catastrophe pools, and France guarantees continuity of cover and a statutory 'right to be forgotten' for cancer survivors.
• Question 1 — Key areas of concern: premium volatility, the extra cost of paying monthly (a 'poverty premium'), policy complexity, under-insurance and claims friction. The same challenges appear across motor, pet, GAP, long-term care and protection insurance.
• Question 2 — The Consumer Duty: the right direction, but hard to evidence and to enforce. Its price-and-value outcome needs consistent, comparable, published metrics — above all the claims ratio.
• Question 3 — Distribution and sales: the rules police the process of selling, not the outcome; price comparison websites compete on headline price, not suitability. Comparable cover information should be shown alongside price.
• Question 4 — Access: flood- and subsidence-exposed households, older and medically-impaired travellers, and low-income households face real barriers that Flood Re and travel-insurance signposting only partly address.
• Question 5 — Claims handling: the area of greatest and most immediate detriment. Only around 32 per cent of 2024 storm claims were paid, and the Ombudsman upholds about 41 per cent of buildings-insurance complaints. Outsourcing and cash settlements need transparency and discipline.
• Question 6 — Enforcement: the FCA is more active than before, but enforcement is slow and of low public visibility. Firm-level outcome data should be published.
• Question 7 — The Financial Ombudsman Service: a genuine strength; the priorities are consistency, timeliness, and fuller use of its complaints data as an early-warning signal.
• Question 8 — Gaps in the framework: the legislative framework is sound but has specific gaps — the availability of cover and the threat of uninsurability above all — and is not yet well adapted to AI (proxy discrimination, inertia pricing, explainability).
• Close the non-insurance gap — measure insurance penetration by income and tenure, back 'insurance with rent' schemes, and consider a simple low-cost contents product.
• Publish value measures and firm-level claims performance data — so that 'fair value' and claims quality become visible and comparable.
• Require comparable cover information alongside price, and common market-wide definitions for the terms that drive disputed claims.
• Develop a durable, permanent successor to Flood Re well ahead of its 2039 closure, and recognise the availability of essential cover as a public-interest objective.
• Establish a statutory right to continuity of cover (on the model of France's Loi Évin), and a 'right to be forgotten' for people who have recovered from serious illness.
• Strengthen oversight of outsourced claims handlers, and discipline the use of cash settlements.
• Bring visible, credible enforcement, and tighten the feedback loop between the Ombudsman and the FCA.
• Issue FCA guidance on the governance of AI in consumer insurance — proxy-discrimination testing, a prohibition on inertia pricing, and explainability and human review of adverse automated decisions.
The full submission develops each of these points, sets out recommendations, and provides sources.
WRITTEN EVIDENCE
House of Lords Financial Services Regulation Committee
Inquiry into the regulation of the consumer insurance market
Submitted by Abgalis Limited
June 2026
This written evidence is submitted by Abgalis Limited, a United Kingdom company developing climate-risk intelligence and analytics for use by insurers and reinsurers. The submission draws on the firm's expertise in risk management, risk analytics and the assessment of climate and catastrophe risk. That expertise base includes the Certified Fellowship of the Institute of Risk Management (CFIRM); the CRISC (Certified in Risk and Information Systems Control) and CISA (Certified Information Systems Auditor) designations of ISACA, the global professional body for information-systems governance, risk and audit; and doctoral and postgraduate management qualifications (a PhD and an MBA). The views expressed are those of Abgalis Limited; they are not submitted on behalf of any insurer, trade body or client, and should not be attributed to any of them.
Declaration of interests. Abgalis Limited has a commercial interest in how insurers assess, model and price risk, because the firm develops analytics intended for that market. This submission is, nonetheless, an independent and evidence-based assessment of the consumer-facing regulation of home and travel insurance. Where it argues for more transparent and better-evidenced risk assessment, Abgalis Limited discloses that it would, in principle, stand to benefit from a market that places a higher value on risk analytics, and invites the Committee to weigh the evidence with that interest in mind. Question 8 discusses the role of climate and catastrophe risk analytics, the field in which Abgalis Limited operates; that passage is expressly flagged. Abgalis Limited would be glad to give oral evidence, or to provide further detail on any point raised below.
1. Home and travel insurance work well for the majority of consumers who buy a standard product, make no claim, and switch at renewal. The regulatory framework is not, however, equally effective for the minority who most need it to work: people making a significant claim; people whose risk profile makes cover hard to obtain or afford; and people who lack the time, confidence or capability to navigate a price-led market. This submission focuses on those groups, because that is where the regulatory questions are hardest and the consumer detriment is greatest. It begins, before turning to the Committee's eight questions, with the two themes that cut across all of them - affordability and access - including the most acute access failure of all: the large minority of low-income and renting households who hold no insurance at all.
2. Abgalis's central argument is that conduct regulation has become materially more sophisticated over the last five years - the General Insurance Pricing Practices reforms and the Consumer Duty are genuine improvements - but that it remains built around the conduct of firms toward individual customers, and is largely silent on two structural issues. The first is the availability of insurance as risk-based pricing becomes ever more granular. The second is the quality and contestability of the risk and value judgements that now sit behind every price and every claims decision. As pricing, underwriting and claims triage are increasingly automated, these structural gaps will widen unless the framework is updated.
3. The Consumer Duty has raised the standard expected of firms, but it is hard to evidence and hard to enforce, and its 'fair value' outcome lacks the consistent, comparable metrics that would let it bite. The most informative measure of value in general insurance - the proportion of premium returned to consumers as claims - is already collected by the regulator and should be published in a consistent, comparable and prominent form.
4. The most serious and immediate unresolved issue is the handling of claims - particularly weather and escape-of-water claims, the use of outsourced claims handlers, and cash settlements - where incentives are structurally misaligned and oversight is weak. The regulator's own evidence, and the recent super-complaint by Which?, point the same way.
5. Access to insurance for higher-risk consumers - flood-exposed and subsiding homes, older travellers and those with medical conditions, and low-income households - is currently managed by a patchwork of temporary or voluntary measures with no durable strategy for what happens as climate change and ever-finer pricing erode the cross-subsidy on which affordable cover depends. This is the single largest gap in the framework, and the closure of Flood Re in 2039 makes it urgent. Several continental European markets address comparable pressures through permanent statutory mechanisms; the United Kingdom, so far, has not. The starkest illustration is long-term care insurance, a market that has effectively failed in the United Kingdom, while France sustains both a public 'autonomy' branch of social security and a standardised private market.
6. The framework is not yet well adapted to the adoption of artificial intelligence. The United Kingdom's principles-based, technology-neutral approach is reasonable, but it leaves genuine uncertainty about proxy discrimination, pricing that exploits consumer inertia, and the explainability of automated decisions. This submission recommends targeted regulatory guidance rather than new primary legislation. Finally, at each of the Committee's questions this submission compares the United Kingdom's approach with that of the European Union and selected member states: the recurring finding is that the United Kingdom leads on conduct regulation but lags on the structural questions of availability and catastrophe resilience, where several European jurisdictions rely on permanent statutory mechanisms. A consolidated list of twenty-one recommendations appears at the end of the submission.
7. Two themes cut across all eight of the Committee's questions and, in Abgalis's view, matter more than any other: whether consumers can afford insurance, and whether they can obtain it at all. Because they are cross-cutting, they risk being addressed only in fragments. This section draws them together before the submission turns to the Committee's specific questions.
8. On affordability, the headline position looks unalarming - the average price of a combined buildings and contents policy, noted under Question 1, was around 379 pounds at the end of 2025. But an average is a poor guide to a distributional problem. Premiums have been volatile, rising sharply through 2023 and 2024 before easing; they are far higher for households at the tail of the risk distribution; and they consume a far larger share of income for poorer households than for richer ones. Affordability is not a single number - it is a question of who can, and who cannot, fit essential cover into a constrained budget.
9. The clearest expression of this is the 'poverty premium' - the tendency for low-income households to pay more for the same essential services. The University of Bristol has estimated the poverty premium at around 490 pounds per year for the average low-income household across all essential services, and insurance is a significant component of it: home contents cover costs more in the lower-income, higher-crime areas where many such households live, and, as set out under Question 1, paying monthly through premium finance costs more than paying annually - the option the poorest are the least able to take. The actuarial profession, through the Institute and Faculty of Actuaries, has run a dedicated campaign on the poverty premium. It is a recognised and measurable problem, not a matter of impression.
10. Access, at its most acute, is not about paying too much - it is about holding no cover at all. Around one in five United Kingdom households has no home insurance, and the gap is heavily concentrated: among those who rent, penetration of contents insurance is only around 53 per cent, meaning that close to half of renting households have no contents cover whatsoever. These are, disproportionately, low-income households. The result is a regressive outcome that should trouble the Committee: insurance is most valuable to those with the least financial resilience - a family that cannot replace a flooded carpet, a broken boiler or a stolen laptop from savings - and yet those are precisely the households least likely to hold it. When loss strikes an uninsured low-income household, it falls in full on the family, or on the state and on charities, rather than being pooled and absorbed. This is the most serious access failure in the consumer market, and it is largely invisible to the regulatory framework: uninsured households generate no premium data, no complaints and no claims, and so they simply do not appear in the evidence the regulator routinely sees.
11. The framework is poorly designed to see this problem, still less to act on it. The Consumer Duty governs the treatment of the consumers a firm has; it says little about the consumers a firm, or the market, never reaches. 'Fair value' is of no help to a household that can afford no policy at any price. There are, however, proven and proportionate responses. 'Insurance with rent' schemes - low-cost contents cover offered through social landlords, who act as trusted intermediaries for tenants with limited financial confidence - have a long track record of reaching households the open market does not. Simple, standardised, genuinely low-cost contents products would help. And none of this can be managed while it is not measured: the regulator does not routinely publish insurance penetration by income or by tenure.
12. Abgalis therefore recommends that affordability and access be treated as explicit objectives of the framework, measured and reported on directly, and that the concentration of non-insurance among low-income and renting households be addressed specifically - through measurement of penetration by income and tenure, support for proven low-cost access routes such as insurance-with-rent schemes, and consideration of a simple, standardised, low-cost contents product. The detailed recommendations on availability for higher-risk groups appear under Questions 4 and 8; the purpose of this section is to establish, at the outset, the theme that those recommendations serve.
13. Affordability and volatility. In headline terms, home insurance remains relatively affordable for most people: the average price of a combined buildings and contents policy was around 379 pounds in the final quarter of 2025, lower than a year earlier. But headline averages conceal two problems. First, prices have been volatile - rising sharply through 2023 and 2024 before easing - driven principally by claims inflation rather than by firm conduct. Second, averages say nothing about consumers at the tail of the risk distribution: those in flood- or subsidence-exposed properties, in homes of non-standard construction, or with prior claims, for whom cover is far more expensive or simply unavailable.
14. Claims inflation and the value question. The cost of settling claims has risen materially. Industry data show insurers paid out a record 6.1 billion pounds in property claims in 2025, with the average home insurance claim rising by roughly 15 per cent year on year to about 6,000 pounds, and rising further in early 2026. Rising claims costs are a legitimate driver of premiums. But they also sharpen the central consumer question: is the price paid reasonable relative to the protection actually delivered when a claim is made? That question - fair value - is the right one, and it is examined under Question 2.
15. The cost of paying monthly. A large share of consumers cannot afford to pay for insurance annually and rely on premium finance. The FCA's premium finance market study found that premium finance was used for roughly 48 per cent of motor and home policies; that around 60 per cent of consumers pay headline annual percentage rates of between 20 and 30 per cent; and that paying monthly typically costs 8 to 11 per cent more than paying annually. This is, in effect, a poverty premium: the consumers least able to afford insurance pay the most for it. The FCA found that the cost of premium finance has fallen, which is welcome, but rates in that range on what is operationally a short-term, low-risk receivable continue to warrant close scrutiny of fair value.
16. Complexity and information asymmetry. Home and travel policies are bundles of cover, conditions, limits, excesses and exclusions that very few consumers read or fully understand. The insurer knows far more about the risk, and about the policy, than the consumer does. This asymmetry is the root cause of several concerns addressed below - under-insurance, mis-buying through price comparison websites, and disputed claims. It is particularly acute in travel insurance, where the consequences of an imperfectly disclosed medical condition or an unnoticed exclusion can be financially severe and arise at the worst possible moment.
17. Under-insurance. Many home policies are written on sums insured - particularly buildings rebuild costs - that are too low, often because the consumer was asked to estimate a figure they have no reliable way of knowing. Where a policy contains a condition of average, under-insurance can reduce an otherwise valid claim proportionately, so a consumer who has paid premiums in good faith receives less than their loss. Building-cost inflation has made this materially worse. Under-insurance is largely invisible to the consumer until the point of claim, and is poorly addressed by current disclosure.
18. Claims friction. For the minority who make a significant claim, the experience is too often slow, adversarial and opaque. This is the single area in which the gap between the promise of insurance and its delivery is widest, and it is addressed in detail under Question 5.
19. The same structural features appear across other consumer general insurance lines. Motor insurance shows the same volatility, premium-finance cost and claims-friction issues on a larger scale; the Government's Motor Insurance Taskforce reported average motor premiums of around 551 pounds in 2025, down from a peak near 650 pounds. Pet insurance raises a distinct and serious problem: because a condition treated under one policy year is commonly treated as 'pre-existing', and therefore excluded, if the consumer switches insurer, pet owners are effectively locked in to their incumbent and exposed to steep renewal increases - a structural barrier to the very switching that the rest of the framework assumes. Guaranteed Asset Protection insurance, mobile-phone and gadget insurance, and other add-on and point-of-sale products have repeatedly shown poor value; the FCA's 2024 intervention in Guaranteed Asset Protection insurance, where it found that only 6 per cent of premiums were paid out in claims while commissions reached as high as 70 per cent, is the clearest recent example. The common thread is that detriment concentrates wherever the consumer is least able to shop around: at the point of sale, in add-ons, in lock-in products, and in monthly-payment arrangements.
20. The starkest case - long-term care insurance. Question 1(a) invites comment on other insurance types, and the most instructive is one defined not by mis-selling or poor value but by its near-absence. Long-term care insurance - cover against the cost of care in old age, often called dependency insurance - is, for practical purposes, a market that has failed in the United Kingdom. Pre-funded private products have been withdrawn, and insurers themselves say that there is little demand and that the risk is hard to price at a level consumers will pay. The public side is no more settled: the cap on lifetime care costs recommended by the Dilnot Commission in 2011, and legislated thereafter, was repeatedly delayed and then scrapped in July 2024, and the question has been passed to the Casey Commission on adult social care, which is not due to report finally until 2028. The result is that the cost of care - which can run into hundreds of thousands of pounds - falls in full on individuals and families, with neither a private insurance market nor a settled public scheme to pool it.
21. Long-term care insurance is relevant to this inquiry for two reasons. First, it is the endpoint of the availability problem that runs through this submission: it shows what happens when an essential protection is left wholly to a risk-based market, and that market then exits. Home insurance in the most flood-exposed areas is on a milder version of the same trajectory, and the framework should treat the long-term care market as a warning rather than as an unrelated curiosity. Second, the contrast with France - set out under Question 8 - shows that the outcome was not inevitable: a comparable country has sustained both a private long-term care insurance market, disciplined by a common-standards quality label, and a public backstop. A market failure of this kind is, in the end, a policy choice as much as an economic fact.
22. Protection insurance and the barrier of age. A further pattern appears in the protection lines that sit around the home and the household budget - mortgage protection insurance, income protection, payment protection insurance, and cover against disability and long-term sickness. Here the access barrier is, above all, age. Standard income protection insurance has a market-wide maximum entry age of around 59; payment protection and mortgage payment protection products are generally restricted to, at most, the consumer's state pension age. A consumer aged 60 or over cannot, in practice, take out full new income or payment protection cover - even though that is precisely the stage of life at which the risk of long-term sickness is rising. Health-based exclusions compound the age barrier. Payment protection insurance also carries a cautionary history: its earlier, mis-sold form was the subject of the largest consumer-redress exercise in United Kingdom financial history. The cumulative result is a large and well-recognised 'protection gap' - millions of households underinsured against the loss of income through disability, serious illness or death.
23. This is relevant to the inquiry because it is the same dynamic seen in travel insurance for those with medical conditions, and in long-term care: a risk-based market that narrows or closes precisely as a consumer's age or health makes the insured event more likely, and the protection more necessary. It also connects directly to the home, because mortgage-related protection insurance exists for the reason that the home, and the mortgage secured on it, are the foundation of most households' financial security. France has taken a markedly different approach both to the insurance that surrounds a mortgage and to the position of consumers who have recovered from serious illness; that approach, and the limits of it, are set out under Question 8.
24. European comparison. The pressures described in this section are not unique to the United Kingdom. Across the European Union, the affordability of home and travel cover has been squeezed by the same claims inflation and the same rising weather losses. EIOPA - the European Insurance and Occupational Pensions Authority, the European Union's insurance supervisory authority - reported in its 2024 Consumer Trends Report that consumers' access to non-life insurance products had slightly declined, partly because of financial pressure on households and higher, inflation-driven costs. The United Kingdom's concerns are, in other words, part of a Europe-wide pattern; what differs between jurisdictions is less the diagnosis than the regulatory and structural response. It is those responses that the comparisons at the end of each question in this submission are intended to draw out.
25. The Consumer Duty, in force for open products from 31 July 2023 and for closed products from 31 July 2024, is the most significant change to United Kingdom conduct regulation in a decade. Its shift from rules to outcomes - across products and services, price and value, consumer understanding, and consumer support - is the right direction of travel. It has had real effects: firms now conduct fair value assessments; some poor-value products have been withdrawn or repriced; and the Duty gave the FCA the basis for interventions such as the 2024 pause of Guaranteed Asset Protection insurance sales. Abgalis supports the Duty and does not advocate its repeal or dilution.
26. The Duty's principal weakness is not its principles but its measurability. An outcomes-based regime depends on the regulator and firms being able to observe outcomes. The FCA's own multi-firm work has found that many firms still monitor processes rather than outcomes, and lack direct evidence of what customers actually experience - especially at the claims stage. Without consistent metrics, 'good outcomes' and 'fair value' remain matters of judgement; and judgement is difficult to supervise at scale, and difficult to enforce against.
27. The price and value outcome is, in substance, a quasi-actuarial assessment, and it should be supported by quasi-actuarial evidence. The most informative single indicator of value in a general insurance product is the proportion of premium returned to consumers as claims - the claims ratio - interpreted alongside the claims acceptance rate and complaints data. The 2024 Guaranteed Asset Protection intervention worked precisely because the figure of 6 per cent paid out made poor value undeniable. The FCA already collects general insurance value measures data. Abgalis recommends that those measures - claims frequencies, claims acceptance rates, average payouts and, where meaningful, claims ratios - be published at product and distribution-channel level in a consistent, comparable and prominent form. Publication would allow the Duty to bite through transparency and market discipline, not solely through case-by-case supervision.
28. There is also a proportionality risk. The Duty has generated a large volume of documentation, and the FCA itself moved during 2025 to streamline and clarify it. The objective should be that compliance with the Duty is evidenced by outcome data, not by the volume of process documentation a firm can produce. A Duty demonstrated through comparable, published metrics would be both more effective for consumers and less burdensome for well-run firms.
29. Finally, the Duty's effectiveness depends on enforcement, which is addressed under Question 6. An outcomes-based regime with weak or slow enforcement risks becoming aspirational. The Consumer Duty is necessary, but it is not, on its own, sufficient.
30. European comparison. The European Union has no single instrument equivalent to the Consumer Duty. It pursues similar objectives through more targeted, rules-based means: the product oversight and governance requirements of the Insurance Distribution Directive, which oblige manufacturers to design products for an identified target market and to monitor them; and the value-for-money work of EIOPA, which issued a supervisory statement in 2021 and, more recently, benchmark methodologies in 2024. The decisive differences are scope and form. EIOPA's value-for-money regime is concentrated on unit-linked and other insurance-based investment products, where poor value has been most visible; the United Kingdom's Consumer Duty is broader - it applies an outcomes-based standard across all retail products, including home and travel insurance. On this comparison the United Kingdom is, if anything, ahead, because its regime is more ambitious in reach. The qualification made in this section nonetheless stands: an outcomes-based regime delivers only if outcomes are measured, and here the European Union's more data-driven, benchmark-based approach to assessing value is instructive for the United Kingdom.
31. The regulation of insurance distribution - principally the FCA's Insurance: Conduct of Business Sourcebook, which derives from the now-assimilated Insurance Distribution Directive, and is overlaid by the Consumer Duty - sets sound expectations: a 'demands and needs' assessment, standardised product information, and rules on disclosure and remuneration. The framework is broadly adequate in design. Its weakness is that it polices the process of selling but does very little to secure the outcome - whether the consumer has ended up with cover that will actually respond to their circumstances.
32. The structural problem is that the dominant distribution channel for home and travel insurance, the price comparison website, sorts the market on a single, highly visible variable: headline price. Cover, excesses, limits and exclusions vary enormously between products that appear side by side at similar prices. A 'demands and needs' statement and a standardised Insurance Product Information Document do not equip a typical consumer to weigh those differences. The result is a market that competes hard on price and weakly on suitability, and a real risk of consumers buying cover that is appropriate only until they need it.
33. The remuneration and add-on dimension matters here too. Detriment concentrates in products sold as add-ons or at the point of sale, where there is no comparison and the consumer's attention is elsewhere. The Guaranteed Asset Protection example shows how far value can be eroded when commission, rather than claims, drives the economics of a product. Distribution regulation should be most demanding precisely where the consumer's ability to shop around is weakest - which is the inverse of how market discipline naturally operates.
34. Abgalis recommends two changes. First, standardised and comparable cover information should sit alongside price wherever products are compared - for example, a small number of standardised cover indicators (key limits, key exclusions, excess levels, and whether cover is 'basic', 'standard' or 'comprehensive' against an agreed benchmark) - so that price can be read against cover rather than in isolation. Second, the 'demands and needs' test should be treated, under the Consumer Duty, as an outcome to be evidenced, not a form to be completed.
35. The honest answer is: poorly - and the framework should stop assuming otherwise. Most consumers do not read full policy documents, and would not reliably understand the interaction of conditions, limits and exclusions if they did. The Insurance Product Information Document was a step toward standardised disclosure, but it is too generic to support a genuine comparison. The FCA's own work following the Which? super-complaint identified weak consumer understanding of what policies cover as a core problem, and the FCA has indicated it will press firms on the clarity of policy wordings.
36. Disclosure should be redesigned around the few things that determine whether a claim is paid. Three improvements would help. First, a short, standardised 'what is and is not covered' summary, using common definitions across the market, so that the same words mean the same thing - the FCA's review found that firms do not even define 'storm' consistently. Second, common, plain-language definitions for the small number of terms that drive most disputed claims: storm, flood, escape of water, accidental damage, wear and tear, and gradual deterioration. Third, clear and prominent disclosure, at the point of sale, of the matters most likely to defeat a claim - under-insurance, unoccupied-property conditions, security and maintenance conditions, and, for travel insurance, the consequences of medical non-disclosure. Understanding cannot be perfected, but it can be concentrated on the points that matter.
37. Price comparison websites have delivered real benefits. They have made the market more transparent on price, lowered search costs, and made switching easy - and switching, since the ban on price walking, now genuinely protects consumers from the loyalty penalty. They should not be characterised as harmful. But they are structurally biased toward price over suitability - for the reason given earlier in this section, that the market sorts on headline price while cover, excesses and exclusions vary widely - and that bias shapes the products manufactured for them: insurers compete to hit a comparison-site price point, which creates pressure to thin cover, raise default excesses, or narrow definitions in ways the consumer will not notice until a claim.
38. The Committee may also wish to note the competition history. In 2020 the Competition and Markets Authority fined the price comparison website Compare the Market 17.9 million pounds for imposing 'wide most-favoured-nation' clauses on home insurers - clauses that prevented insurers from offering lower prices through other channels - although the Competition Appeal Tribunal set that decision aside in 2022 on the evidence. The episode illustrates that the contractual relationships between comparison websites and insurers can themselves affect the prices consumers see, and that this intersection of competition and conduct regulation deserves continued attention. The recommendation made earlier in this section - comparable cover information displayed alongside price - is the most direct way to make comparison websites work better for consumers without removing their genuine benefits.
39. Most consumers buy from the mainstream market, through a price comparison website, and the analysis above concerns that market. But a significant minority cannot. Consumers whose homes are exposed to flooding or subsidence, of non-standard construction (for example thatch, timber frame, flat roofs, or certain insulation types), of high value, in unusual occupancy (let, unoccupied, or recently subject to a claim), or whose history is adverse (prior claims, prior insolvency, or unspent criminal convictions) present 'non-standard' risks. These fall outside the automated mainstream market and the price comparison websites. They are placed instead through specialist intermediation - specialist brokers, managing general agents, and ultimately the specialist and London markets, including Lloyd's.
40. That specialist distribution chain is longer than the mainstream one, and each link in it carries remuneration. A single non-standard consumer risk may pass through a retail broker, a wholesale broker and a managing general agent before it reaches the insurer that actually carries the risk; brokerage and commission are taken at more than one point, and the retail broker may in addition charge the consumer a separate broker or administration fee. The FCA's own Wholesale Insurance Broker Market Study (final report, 2019), although focused on commercial and wholesale broking rather than personal lines, identified precisely the dynamics that matter here: remuneration rates that vary materially between placements; brokers earning higher remuneration when they place business into their own facilities and managing general agents than into the open market; and conflicts of interest in steering risks toward the higher-remuneration outcome. The consumer with a non-standard risk therefore pays twice over - once because the risk itself is genuinely higher, and again because the distribution of that risk is longer, more specialised and more expensive. The second charge is largely invisible to them.
41. This is a fair value and transparency issue, and the regulatory tools to address it largely exist: the FCA's product-governance rules and the Consumer Duty already require firms to assess value across the whole distribution chain, including all remuneration taken along it. The gap is transparency to the consumer. A consumer placing a non-standard home risk through a specialist chain has no clear sight of how much of the price is the cost of risk and how much is the cost of distribution. Abgalis recommends that, for non-standard and specialist consumer placements, firms be required to disclose to the consumer the total remuneration taken across the distribution chain. Visibility of the placement cost would let the consumer contest it, would support the availability objective discussed under Question 4 - a cost that is visible is more likely to be competed down - and would apply, to this least-contested corner of the market, the same transparency this submission recommends for the market as a whole.
42. European comparison. The United Kingdom's distribution rules are, in their origin, European. The demands-and-needs test and the standardised Insurance Product Information Document both derive from the Insurance Distribution Directive, and the Information Document remains in use across the European Union; EIOPA published a third report on the application of that Directive in 2026. The Information Document illustrates both the value and the limits of standardised disclosure - it is a genuine improvement on unstructured policy wordings but, as in the United Kingdom, it is too generic to support a real comparison of cover. Price comparison websites are a feature of several European markets and are regulated as intermediaries under the same Directive. Two points follow. First, the United Kingdom and the European Union began from a common framework and have since diverged - the United Kingdom adding the Consumer Duty, the European Union pursuing its own reviews - so each is now a useful point of comparison for the other. Second, the weakness identified in this section, namely disclosure that standardises form without making cover genuinely comparable, is common to both; that suggests the remedy recommended here - comparable cover information displayed alongside price - would improve on the shared European starting point, and not merely patch a domestic shortcoming.
43. Several identifiable groups face difficulty in obtaining suitable home or travel insurance at an affordable price, or at all: households in properties exposed to flooding or subsidence, or of non-standard construction; older travellers, and travellers with pre-existing medical conditions; people with prior claims, or living in areas with adverse claims experience; people with unspent criminal convictions; and, cutting across all of these, low-income households for whom even standard cover is a stretch, and who are therefore the most likely to be under-insured or wholly uninsured.
44. The underlying cause is not, in most cases, firm misconduct. It is the logical result of risk-based pricing. As insurers price more granularly - using more data, at finer geographic resolution, with more powerful models - premiums converge on each consumer's individual expected cost. Actuarially, this is 'fair': each consumer pays for the risk they bring. But the social function of insurance is risk-pooling, and ever-finer pricing steadily dismantles the cross-subsidy that makes cover affordable for higher-risk consumers. The consumer-protection framework is built almost entirely around conduct toward individuals, and is largely silent on this structural consequence. As both climate change and data-driven pricing advance, the affected groups will grow.
45. Flood-exposed homes are the clearest case, and the one where public policy has already had to intervene. Flood Re - the industry reinsurance scheme established in 2016 - has materially improved the availability and affordability of flood cover. But it is a transitional mechanism: it has a fixed end date of 2039, a statutory objective of managing the transition to risk-reflective pricing, and significant exclusions - notably, homes built after 1 January 2009 are not covered, even though a substantial number of new homes have since been built in flood-risk areas. Flood Re's 'Build Back Better' scheme, which funds flood-resilient repairs, is a constructive step. The unresolved question is what replaces Flood Re; Abgalis returns to it under Question 8.
46. Travel insurance for older people and for those with medical conditions is the second clear case. The FCA's signposting rules, in force since April 2021, require firms to direct consumers who are declined, excluded or heavily surcharged because of a pre-existing medical condition to a directory of specialist providers; the premium trigger for signposting rose from 100 pounds to 200 pounds from 1 January 2026. Signposting is a sensible, low-cost measure, and the FCA assesses it as having had a positive effect - but the FCA also found that effect to be smaller than expected. Signposting helps a consumer find a specialist market; it does not guarantee that the specialist market is affordable. For some older travellers, and for those with serious conditions, cover remains very expensive or effectively out of reach.
47. A further, less visible barrier compounds these difficulties. Because the risks of the groups described above are, by definition, 'non-standard', they are commonly placed not through the mainstream market but through the longer and more expensive specialist and London-market distribution chain described under Question 3. These consumers therefore bear a higher cost not only for their risk, but for the placement of it - and that second cost is one they can rarely see.
48. Only partially. The framework's tools for accessibility are a patchwork: a time-limited reinsurance scheme for flood (Flood Re); a signposting requirement for medical travel insurance; and the general expectations of the Consumer Duty and the FCA's guidance on vulnerable customers. Each is useful. None amounts to a durable, system-level answer to the question of how a market based on individual risk pricing keeps essential insurance available to those who most need it.
49. Two structural gaps stand out. First, there is no general regulatory expectation regarding the availability of cover: conduct rules govern how a firm treats a customer it chooses to serve, not whether the market as a whole leaves anyone unable to obtain essential cover. Second, the treatment of vulnerable consumers rests largely on FCA guidance rather than on rules or statute, which makes it less certain and harder to enforce consistently. Abgalis does not, in general, recommend compelling firms to write new risks they judge to be uneconomic; it does, however, recommend - under Question 8, and drawing on French precedent - a statutory guarantee that a consumer who is already insured does not lose continuity of cover at the moment their risk becomes known. Abgalis also recommends, under Question 8, that the framework explicitly monitor and report on availability and affordability, so that emerging access gaps become visible to Parliament and the regulator before they become crises - as the flood problem did before Flood Re was created.
50. European comparison. Access for higher-risk consumers is a recognised problem at European Union level, and the European response is, in one respect, more advanced than the United Kingdom's: it is being addressed as a system-level question. EIOPA publishes a dashboard of the insurance protection gap for natural catastrophes drawing on data from thirty European countries; it records that natural catastrophes caused some 900 billion euros of losses in the European Union between 1981 and 2023, more than a fifth of it in the last three years, and that only around one-fifth of catastrophe losses in the European Union are insured. In response, EIOPA and the European Central Bank jointly proposed, in December 2024, an EU-level approach built on two pillars: a public-private reinsurance scheme to widen catastrophe cover, and a Member-State-funded public disaster fund, conditional on governments having taken agreed risk-mitigation measures beforehand. Whatever the merits of that particular design, the contrast in posture is the point: the European Union is treating the availability of catastrophe cover as a structural problem requiring a permanent, system-level answer, whereas the United Kingdom, beyond 2039, still relies on no settled mechanism at all. The permanent national schemes that several member states already operate are examined under Question 8.
51. For most straightforward claims, yes. But the claim is the moment at which the product is actually delivered, and it is the area in which this submission identifies the most serious and immediate consumer detriment. The evidence is not anecdotal. The FCA's 2025 review of home and travel claims handling found weak practice across definitions, communication, oversight of outsourced handlers, and the use of cash settlements. Strikingly, only around 32 per cent of storm-damage claims in the FCA's 2024 sample resulted in a payment. Buildings insurance complaints to the Financial Ombudsman Service reached a ten-year high, and the Ombudsman upheld around 41 per cent of buildings insurance complaints in 2024/25 - well above its all-products average of 34 per cent. In September 2025 the consumer body Which? made a super-complaint to the FCA about home and travel insurance; in its December 2025 response the FCA expanded its programme of work and confirmed that it had already opened enforcement cases. When the regulator's own sample shows roughly two-thirds of storm claims declined, and the Ombudsman upholds four in ten buildings disputes, the framework is not yet delivering fair claims outcomes reliably.
52. Some claim declines are, of course, legitimate: not all damage in a storm season is storm damage, and gradual deterioration and lack of maintenance are genuinely excluded. The concern is not that firms decline invalid claims; it is that the boundary is being drawn in ways the consumer cannot anticipate or contest, using definitions that are inconsistent between insurers and disclosed too late to inform the purchase. A high decline rate combined with a high Ombudsman uphold rate is the signature of a definitional and communication problem, not merely of a high incidence of invalid claims.
53. The rules themselves are reasonable. The Insurance: Conduct of Business Sourcebook requires claims to be handled promptly and fairly, and not rejected unreasonably. The Consumer Insurance (Disclosure and Representations) Act 2012 reformed the law on consumer non-disclosure, sensibly replacing a duty to volunteer information with a duty to take reasonable care not to make a misrepresentation, and proportioning the remedy to the nature of any misrepresentation. The Consumer Duty overlays an outcomes obligation. The gap is in evidence and enforcement, not in the rules. The FCA does not routinely publish claims acceptance rates, average settlement times or cash-settlement usage at firm level in a way that would let consumers, the market and Parliament see which firms handle claims well. Abgalis recommends that it should. Transparency on claims performance would do more to improve handling than any further elaboration of the rulebook, because it would make claims performance a competitive variable rather than a hidden one.
54. Claims handling for home insurance and, especially, for travel insurance is extensively outsourced - to third-party administrators, to loss adjusters, and to supply-chain firms such as approved repairers, restorers and medical-assistance providers. Outsourcing is not inherently harmful, and can bring genuine expertise and scale. But it creates an incentive-alignment problem that consumers do not see and cannot influence. The claims-handling cost and the claims cost are the largest controllable costs in a general insurer's accounts. An outsourced handler remunerated, explicitly or implicitly, for controlling those costs faces an incentive that is not aligned with the consumer's interest in a prompt and full settlement. The consumer, meanwhile, experiences the outsourced handler as the insurer, while the regulated firm may treat that handler as a supplier at arm's length.
55. The regulatory principle is correct: under the Consumer Duty and the FCA's outsourcing rules, the authorised insurer remains fully accountable for outcomes it has delegated. But the FCA's 2025 review found that oversight in practice is uneven, and the FCA has identified the oversight of third parties as a priority. Abgalis recommends that the FCA require insurers to: monitor and evidence outcome metrics - acceptance rates, settlement times, complaint and Ombudsman uphold rates, and customer satisfaction - for each material outsourced handler, not merely service-level and cost metrics; examine the remuneration structures of outsourced claims handlers and supply chains for incentives that reward cost suppression over fair settlement; and hold named senior managers, under the Senior Managers and Certification Regime, explicitly accountable for the fair handling of outsourced claims.
56. Cash settlements - paying the consumer a sum of money instead of arranging the repair or replacement - can be a good outcome. They give the consumer choice and control, and can be faster. But they also transfer risk and effort to the consumer: the risk that the settlement figure, based on the insurer's estimate, is too low; the project-management burden of arranging the work; exposure to building-cost inflation between settlement and repair; and the loss of any warranty or service that the insurer's own supply chain would have provided. The FCA's 2025 review found that some firms had no criteria for when a cash settlement is appropriate, did not monitor cash-settlement outcomes, and in some cases actively promoted cash settlements without regard to consumer vulnerability - including cases in which a vulnerable consumer would plainly have benefited from the insurer managing the repair.
57. A cash settlement should be a considered choice, not a cost-management default. Abgalis recommends that the FCA require firms to: document and disclose the basis on which a cash-settlement figure is calculated, so that the consumer can see what it assumes and can contest it; record the consumer's informed agreement, including an explanation of the alternative of an insurer-managed repair; assess vulnerability before defaulting to a cash settlement; and monitor cash-settlement outcomes - including subsequent complaints and shortfalls - as part of fair value assessment under the Consumer Duty.
58. European comparison. Claims handling is the area in which European frameworks are least harmonised. The Insurance Distribution Directive regulates the sale of insurance in detail but says comparatively little about the conduct of claims; the substantive rules on how claims must be handled remain largely a matter for national law, and they vary considerably between member states. The United Kingdom's position is, in this respect, relatively strong: the Insurance: Conduct of Business Sourcebook contains explicit, enforceable claims-handling rules, and the Consumer Duty applies an outcomes test to the claims stage. The weakness identified in this section is therefore not that the United Kingdom's rules are weaker than Europe's - it is that the United Kingdom does not publish the claims-outcome data that would show whether those rules are being met in practice. That is a gap the United Kingdom could close on its own initiative, and to its own advantage, irrespective of what the European Union does.
59. The FCA has, over the last five years, used its powers in this market more actively than in the preceding decade. The ban on price walking, the pause of Guaranteed Asset Protection insurance sales, the value measures regime, the premium finance market study, the 2025 claims-handling review, and the response to the Which? super-complaint together represent a meaningful supervisory programme. Abgalis does not suggest that the FCA has been inactive.
60. There are, nonetheless, two concerns about the effectiveness of enforcement. The first is pace and visibility. Much of the FCA's work takes the form of reviews, 'Dear CEO' letters, multi-firm thematic findings and voluntary undertakings. These are useful, and often quicker than formal enforcement, but they produce few public, individual enforcement outcomes, which weakens both deterrence and public confidence. The FCA's December 2025 response to the Which? super-complaint disclosed that it had opened two enforcement cases and required action from several senior managers - a proportionate response, but a modest one relative to the scale of detriment that the same documents describe. The second concern is the inherent difficulty of enforcing an outcomes-based regime: it is harder to prove a breach of 'fair value' or 'good outcomes' than a breach of a precise rule, which makes enforcement slower and more contestable. This is an argument not against the Consumer Duty, but for the comparable, published outcome metrics recommended throughout this submission - metrics make breaches visible and evidenced.
61. Abgalis therefore recommends that the FCA: publish firm-level outcome data - claims acceptance rates, complaints, Ombudsman uphold rates, and value measures - so that market transparency supplements formal enforcement; bring and publicise a sufficient number of enforcement cases in the consumer general insurance market to create credible deterrence; and report to this Committee, or to Parliament, on the time taken between identifying detriment and securing redress, since timeliness is itself a measure of enforcement effectiveness. The Committee's own continuing scrutiny is a valuable discipline in this respect.
62. European comparison. The institutional architecture differs markedly. In the United Kingdom a single conduct regulator, the FCA, supervises and enforces across the whole market. In the European Union, supervision and enforcement remain principally the responsibility of national competent authorities in each member state, with EIOPA providing coordination, common standards, supervisory statements and a degree of convergence, but limited direct enforcement power over individual firms. The United Kingdom's single-regulator model has real advantages of clarity, consistency and accountability - there is one body for this Committee, and the public, to hold to account. The concern identified in this section - that enforcement is slow and its outcomes too rarely visible - is, if anything, easier to remedy in a single-regulator system, because there is no diffusion of responsibility. The recommendation that the FCA publish firm-level outcome data, and report on the time taken to secure redress, is in part a recommendation that the United Kingdom use the accountability advantage that its structure already gives it.
63. The Financial Ombudsman Service is a critical part of the consumer-protection framework. It gives consumers access to free, independent redress without recourse to the courts; it resolves a large volume of insurance disputes; and, because it decides what is 'fair and reasonable' in the circumstances, it effectively sets practical standards that feed back into firm behaviour. For a market with the information asymmetry described in this submission, an accessible ombudsman is indispensable, and Abgalis strongly supports its continuation.
64. The Ombudsman's data are also a valuable early-warning signal. That buildings insurance complaints reached a ten-year high, and that the Ombudsman upholds around 41 per cent of buildings insurance complaints against an all-products average of 34 per cent, is direct evidence of a claims-handling problem - evidence that should be used systematically in supervision. Abgalis recommends that the FCA and the Ombudsman make fuller, more transparent and more timely joint use of complaints data to target supervisory attention, and that firm-level Ombudsman uphold rates be given greater prominence as a public indicator of claims-handling quality.
65. Three issues warrant the Committee's attention. The first is consistency and predictability. Because the Ombudsman applies a 'fair and reasonable' standard rather than determining strict legal rights, its decisions can be difficult for firms to predict; greater publication of the principles behind decisions, and of themed patterns in decisions, would improve consistency without removing the discretion that makes the service valuable. The second is timeliness. The Ombudsman has carried significant case backlogs and has set ambitious resolution targets; delayed redress is diminished redress, particularly for a consumer waiting on a home or travel claim, and the Committee should monitor delivery against those targets. The third is the recent reform - from 1 April 2025 - under which professional representatives, such as claims management companies, are charged a fee to refer cases (with ten free cases each year, and a charge of 250 pounds reduced to 75 pounds where the complaint succeeds).
66. That reform is a reasonable response to a high volume of poorly-evidenced, and often unsuccessful, representative-brought cases. The Committee should, however, satisfy itself that it does not deter the minority of well-founded cases brought by representatives, and that it remains entirely free for consumers, charities, and friends or family, to bring complaints directly, as it currently does. More broadly, the relationship between the Ombudsman and the FCA matters: where the Ombudsman sees a pattern of complaints with wider implications, that pattern should translate quickly into regulatory action through the established 'wider implications' mechanism. The Ombudsman resolves the individual dispute; only the regulator can fix the systemic cause. The two should function as a single feedback loop, and the gap between the Ombudsman identifying a pattern and the FCA acting on it should be as short as possible.
67. European comparison. The United Kingdom's Financial Ombudsman Service compares favourably with its European counterparts. The European Union requires, through its Alternative Dispute Resolution Directive, that out-of-court dispute resolution be available to consumers, and national schemes are linked through FIN-NET, the European Commission's financial dispute-resolution network, established in 2001. But provision across the European Union is a patchwork: national schemes differ in jurisdiction - some cover only one financial sector - in procedure, and, crucially, in whether their decisions bind the firm. The United Kingdom benefits from a single, well-resourced ombudsman whose decisions are binding on firms up to a substantial limit, and which is free to the consumer. That is a genuine strength, and the recommendations in this section - on consistency, timeliness, and the use of complaints data - are offered to improve an institution that is, by European standards, already strong.
68. The legislative and regulatory architecture for consumer insurance is, in its essentials, sound. It rests on the Financial Services and Markets Act 2000; the FCA's Insurance: Conduct of Business Sourcebook, derived from the Insurance Distribution Directive; the Consumer Insurance (Disclosure and Representations) Act 2012; the controls on unfair terms in the Consumer Rights Act 2015; and now the Consumer Duty. Abgalis does not propose wholesale legislative change. The gaps are specific, and are addressed below, beginning with the most important.
69. Insurance is not merely a consumer product; it is foundational infrastructure for the economy and for social resilience. A mortgage cannot ordinarily be obtained or maintained without buildings insurance, so the insurability of a home is bound up with its value and its saleability. Insurance allows households and businesses to take risks, to invest, and to recover from shocks; it absorbs losses that would otherwise fall on families, on lenders, on local economies, or on the state. When insurance withdraws from a place, or from a peril, the consequences cascade well beyond the individual policyholder: property values fall, mortgage lending contracts, regeneration stalls, and the state becomes the insurer of last resort by default and without funding. The availability of insurance is therefore a matter of public interest, and not only of consumer protection. The framework should treat it as such - and at present it does not.
70. Climate change is increasing the frequency and severity of the very perils that home insurance exists to cover. The record 6.1 billion pounds of United Kingdom property claims in 2025 is consistent with that trajectory. As physical risk rises, and as pricing becomes ever more granular, cover in the most exposed places becomes first expensive, then unaffordable, and then unavailable - a process of insurance retreat that ends in uninsurability. It has been estimated, including in analysis associated with the Bank of England, that around two million United Kingdom homes could become uninsurable against flood risk by 2050, and around four million homes already sit in areas of medium or high flood risk. The burden falls hardest on low-income households, who are least able to absorb rising premiums and least able to move - at risk, as researchers have put it, of becoming 'climate prisoners' in deteriorating and unsaleable homes. This is the central gap that the framework must confront, and it is the first and most serious of the gaps identified in this submission.
71. Flood Re, established in 2016, has materially improved the availability and affordability of flood cover, and its 'Build Back Better' scheme, which funds flood-resilient repairs, is a constructive measure. But Flood Re is, by statute, a transitional mechanism. It ends in 2039; its objective is to manage the transition to risk-reflective pricing; and it excludes homes built after 1 January 2009. There is, at present, no settled answer to what replaces it. Without a durable successor - and without flood risk being consistently reflected in planning decisions, in building standards, and in investment in physical flood defences - the country faces a cliff-edge in availability and affordability in 2039, at precisely the point at which climate risk will be materially greater than it is today. Abgalis recommends that the Government begin now, well ahead of 2039, to develop the successor framework to Flood Re, and that the Committee press for a clear timetable.
72. What better risk intelligence can, and cannot, do. Abgalis Limited makes one further point transparently, since it engages the firm's own commercial interest, declared above. Better risk intelligence is part of the answer to uninsurability, and not only part of the problem. Granular, asset-level modelling of physical climate and catastrophe risk - the field in which Abgalis Limited works - can allow an insurer to price and underwrite an exposed risk accurately, and to identify the specific mitigation that would make a particular property insurable, rather than withdrawing from a whole postcode. Used well, such tools replace crude exclusion with accurate pricing and targeted resilience, and so help to keep places insurable. The firm equally acknowledges the other edge of the same tool: the more granular the modelling, the more precisely the cross-subsidy within the risk pool can be unwound. The technology is genuinely double-edged. The policy task is to harness risk intelligence to keep communities insurable - by directing it toward mitigation, resilient building and defence investment - while ensuring that granularity is not used simply to price the most exposed households out of the pool altogether. This is a reason for the monitoring and successor-framework recommendations in this submission; it is not an argument against better data.
73. Several continental European jurisdictions have addressed problems comparable to those above through permanent statutory mechanisms, where the United Kingdom has relied on transitional or voluntary measures. Abgalis does not suggest that any foreign model should be transplanted wholesale into a different legal and market context; rather, they show what a durable, system-level answer can look like, and they deserve study. Four contrasts are instructive: one on catastrophe cover; one on the continuity of health cover; one on provision for long-term care; and one on access to mortgage-related cover for those who have had a serious illness.
74. Permanent catastrophe schemes. France's natural-catastrophe regime, known as 'CatNat' and established in 1982, requires every property insurance policy to include cover for natural catastrophes. It is funded by a uniform surcharge on property premiums - raised from 12 per cent to 20 per cent in January 2025 in order to keep the scheme sustainable as losses rise - and is backed by the State-owned reinsurer, the Caisse Centrale de Réassurance, with a State guarantee. Spain's Consorcio de Compensación de Seguros covers 'extraordinary risks', including flooding, through mandatory surcharges on insurance policies and an equalisation reserve accumulated over decades - of the order of 10 billion euros - and it met the cost of the catastrophic Valencia floods of October 2024 from that reserve. The decisive contrast with the United Kingdom is permanence: the French and Spanish schemes are standing national infrastructure, designed to endure and funded transparently; Flood Re is, by design, a temporary bridge with a closing date.
75. Statutory continuity of cover - the Loi Évin. France's 'Loi Évin' of 1989 (Law No. 89-1009 of 31 December 1989) guarantees that a person who leaves a workplace health-insurance scheme - on retirement, on disability, or through unemployment - may continue equivalent cover as an individual, with guarantees identical to those of the group scheme, without the cover being re-underwritten on the basis of the individual's health, and with the premium increase capped by law over the first three years of continuation (to nil, then a maximum of 25 per cent, then a maximum of 50 per cent above the group rate). The principle is that access to health-related cover should not collapse at the very moment a person's circumstances change and their health risk has, by then, become known. The United Kingdom has no equivalent statutory guarantee. Its nearest analogue - the travel-insurance signposting rules for consumers with pre-existing medical conditions - is useful, but far lighter: it points a consumer toward a specialist market without guaranteeing continuity of cover, identical terms, or a capped price. Abgalis recommends that the United Kingdom establish a comparable statutory right - a binding guarantee that a consumer who was insured before their risk became known retains continued cover on terms comparable to those previously held, without the cover being re-underwritten on the basis of that risk, and with any consequent price increase capped by law.
76. A recognised social risk - long-term care and the autonomy branch. France's response to long-term care stands in direct contrast to the United Kingdom's. On the public side, France created in 2020 a dedicated 'fifth branch' of its social security system for the loss of autonomy - the branche autonomie, managed by the Caisse nationale de solidarité pour l'autonomie - placing the risk of dependency in old age alongside sickness, retirement, family and workplace accidents as a formally recognised social risk with its own funding and governance. On the private side, France sustains a functioning long-term care insurance market, supported since 2013 by a voluntary industry quality label, the GAD label (Garantie Assurance Dépendance). To carry the label, a contract must meet defined criteria: common, plain-language vocabulary; a single shared definition of severe dependency based on activities of daily living; whole-of-life cover; a minimum monthly benefit; no medical selection for anyone joining before the age of 50; and the retention of partial rights if premiums later lapse. The GAD label is, in effect, a working example of precisely the approach this submission recommends for home and travel insurance - common definitions and minimum standards that make cover comparable and dependable - applied to a line of cover that the United Kingdom has been unable to keep alive at all.
77. Mortgage-related cover and the 'right to be forgotten'. France treats the insurance that surrounds a mortgage very differently from the United Kingdom. Borrower's insurance (assurance emprunteur) - covering death, disability and incapacity - is in practice required in order to obtain a mortgage, and France has spent more than a decade making that market work for consumers. A succession of reforms, culminating in the Loi Lemoine of 2022 (Law No. 2022-270), gave borrowers the right to change insurer at any time, removed the medical questionnaire entirely for smaller loans repaid before the borrower turns 60, and established a statutory 'right to be forgotten' (droit à l'oubli): a person who has had cancer or hepatitis C need not declare it, and cannot be refused cover or surcharged on account of it, five years after their treatment ends. France's longstanding AERAS convention further assists those with an aggravated health risk to obtain cover. The United Kingdom has no equivalent: a cancer survivor in the United Kingdom has no statutory right to be forgotten, and access to mortgage-related, income protection and long-term-sickness cover rests entirely on insurers' underwriting.
78. The European position is, however, neither uniform nor complete, and it is worth being precise about where the gaps in Europe lie. The right to be forgotten is being harmonised - it is a stated priority of Europe's Beating Cancer Plan, and it is now embedded in the European Union's 2023 Consumer Credit Directive, which obliges member states to transpose it into national law - but it has so far been legislated by some member states and not all, the qualifying periods differ, and it generally covers cancer, and sometimes hepatitis C, rather than serious chronic illness in general. Age, moreover, remains a barrier in Europe much as it is in the United Kingdom: requiring borrower's insurance ensures that the cover is bundled with the mortgage, but it does not remove age-related underwriting limits, and that mandatory cover was itself expensive and weakly competitive until successive reforms forced the market open. The lesson for the United Kingdom is therefore specific. It is not that Europe has solved access to disability, long-term-sickness and mortgage-related cover - it has not. It is that Europe has at least legislated against the one barrier that is plainly unjust - the permanent penalising of people who have recovered from serious illness - while the United Kingdom has not.
79. The lesson Abgalis draws is not that the United Kingdom should adopt a French or Spanish statute. It is that other comparable markets treat the availability of catastrophe cover, the continuity of health cover, provision for long-term care, and fair access for those who have recovered from serious illness, as matters for permanent public infrastructure underpinned by law and, where a private market exists, for clear minimum standards - whereas the United Kingdom has tended to rely on time-limited schemes, such as Flood Re, on voluntary or light-touch measures, such as signposting, and, in the case of long-term care, on a private market that has simply failed. The direction of travel in the European Union reinforces the point: as noted under Question 4, EIOPA and the European Central Bank have proposed a permanent EU-level catastrophe scheme. Abgalis recommends that the Government and the FCA commission a focused comparative review of these European mechanisms, to inform the design of the successor to Flood Re, the United Kingdom's wider approach to guaranteeing access to essential cover, and - in the context of the Casey Commission on adult social care - the role a properly standardised insurance market could play in long-term care.
80. The absence of systematic monitoring of availability and affordability. The framework measures conduct, complaints and, increasingly, value; it does not measure whether identifiable groups are being priced out of, or excluded from, essential cover. Abgalis recommends that the FCA - or another suitable body, drawing on the risk-management and actuarial professions - be tasked with producing a regular public report on the availability and affordability of home and travel insurance for higher-risk groups, and that the availability of essential cover be recognised as an explicit public-interest objective of the framework, so that emerging exclusion becomes visible to Parliament and to the regulator early, rather than being discovered only once it has become a crisis.
81. The legal status of vulnerable-consumer protection. Much of the protection for vulnerable consumers, and much of the substance of fair treatment, currently rests on FCA guidance and the principles-based Consumer Duty, rather than on rules or statute. That has advantages in flexibility, but it makes the protection less certain and harder to enforce consistently. The Committee may wish to consider whether the core protections for vulnerable consumers should be placed on a firmer rules-based or statutory footing.
82. Under-insurance. A narrower gap concerns the condition of average, which can reduce a consumer's otherwise valid claim because of a sum insured that the consumer was never well placed to set. Abgalis recommends that the FCA consider, under the Consumer Duty, requiring firms either to provide robust rebuild-cost and contents-value estimation tools at the point of sale, or to limit the application of average against consumers who answered the firm's questions honestly and with reasonable care - aligning the treatment of under-insurance with the proportionate approach that the 2012 Act already takes to misrepresentation.
83. Not yet fully. The adoption of artificial intelligence in insurance is not a future prospect; it is current. The Bank of England and FCA's 2024 survey found that around 95 per cent of insurance firms already use AI - the highest proportion of any financial sector surveyed. AI is used in pricing, underwriting, fraud detection, claims triage and customer service. The United Kingdom's regulatory approach has so far been to rely on existing, technology-neutral frameworks - the Consumer Duty, the Equality Act 2010, data protection law, the senior-managers regime, and model-risk expectations - rather than to legislate specifically for AI. That approach is defensible, and avoids premature and rigid rules. But 'technology-neutral' should not mean 'unaddressed', and there are specific issues that the existing framework does not yet resolve clearly.
84. Proxy discrimination. The Equality Act 2010 permits insurers to use some protected characteristics in pricing where supported by relevant and reliable data, and prohibits the use of others. But a machine-learning model trained to predict cost can reconstruct a protected characteristic from ostensibly neutral variables - postcode, occupation, or shopping and payment patterns - and price on it indirectly, without any person intending to discriminate, and without the protected characteristic ever appearing in the model. The framework needs to state clearly how the Equality Act and the Consumer Duty apply to such indirect, model-derived discrimination, and what testing firms are expected to perform in order to detect and prevent it.
85. Pricing that exploits inertia. AI makes it technically possible to price not on risk and cost, but on a consumer's predicted willingness to pay, or propensity to switch - charging more to those modelled as less likely to shop around. This is distinct from risk-based pricing, and is in direct tension with the Consumer Duty's fair value outcome. The ban on price walking addressed one specific form of inertia exploitation at renewal; the framework should state clearly that exploiting predicted inertia or price-insensitivity through AI-driven pricing, in any form, is incompatible with fair value.
86. Explainability and contestability. If a consumer is declined cover, heavily surcharged, or has a claim triaged adversely by an automated system, they should be able to obtain a meaningful explanation and to seek human review. Data protection law confers some rights in respect of solely automated decisions, but the application of those rights to insurance pricing and claims is not always clear to consumers, nor consistently delivered by firms. The framework should make explicit that consumers are entitled to an intelligible explanation of, and a route to human review of, materially adverse automated decisions.
87. Governance and model risk. This is where Abgalis's own expertise is most directly engaged. Insurers already operate model-risk and governance frameworks, and both the risk-management and actuarial professions have undertaken substantial work on the fairness of data-driven pricing. The supervisory expectation should be that AI and machine-learning models used in consumer pricing, underwriting and claims are subject to proper model governance - documentation, independent validation, testing for bias and proxy effects, monitoring for model drift, and clear senior-management accountability - proportionate to their impact on consumers. Abgalis recommends that the FCA set out, in guidance, its specific expectations for the governance of AI used in consumer insurance, covering proxy-discrimination testing, the prohibition on inertia-based pricing, explainability and contestability, and model governance.
88. European comparison. On AI, it is the European Union that has legislated and the United Kingdom that has not. The EU's AI Act classifies AI used for risk assessment and pricing in life and health insurance as 'high-risk' and imposes detailed obligations - including bias testing, documentation and a fundamental-rights impact assessment - from August 2026; and EIOPA issued an Opinion on the governance of artificial intelligence in insurance in 2025, applying existing insurance law to AI in the meantime. Abgalis does not recommend that the United Kingdom rush to a statute modelled on the EU AI Act: the United Kingdom's more flexible, outcomes-based approach is a reasonable alternative and a potential competitive advantage. But flexibility is only an advantage if the outcomes are actually specified and supervised. The United Kingdom can achieve much of what the EU AI Act and the EIOPA Opinion achieve through focused FCA guidance, as recommended above, while keeping AI's effects on consumers under review and remaining ready to legislate later should guidance prove insufficient. The course to avoid is neither the EU's nor a considered domestic one, but inaction.
The recommendations made in this submission are consolidated below. They are intended to be proportionate, to build on reforms already underway, and to rely principally on transparency and better-evidenced supervision rather than on extensive new primary legislation.
R1. Close the non-insurance gap. Address the concentration of non-insurance among low-income and renting households - close to half of whom hold no contents insurance - by requiring the FCA to measure and publish insurance penetration by income and tenure; by supporting and scaling proven low-cost access routes, in particular 'insurance with rent' schemes offered through social landlords; and by examining the case for a simple, standardised, low-cost contents product. (Cross-cutting theme; Questions 1 and 4)
R2. Published value measures. Publish general insurance value measures - claims frequencies, acceptance rates, average payouts and, where meaningful, claims ratios - at product and distribution-channel level, in a consistent, comparable and prominent form. (Question 2)
R3. Evidence the Consumer Duty through data. Treat the Consumer Duty's price and value outcome as something evidenced by comparable outcome data, not by the volume of process documentation a firm produces. (Question 2)
R4. Cover information alongside price. Require standardised, comparable cover information - key limits, key exclusions, excess levels, and a 'basic / standard / comprehensive' benchmark - to be displayed alongside price wherever products are compared. (Question 3)
R5. Common claims definitions. Adopt common, plain-language, market-wide definitions for the terms that drive most disputed claims - storm, flood, escape of water, accidental damage, wear and tear - and require prominent point-of-sale disclosure of the matters most likely to defeat a claim. (Question 3)
R6. Transparency of distribution costs. For non-standard and specialist consumer placements, which travel through the longer specialist and London-market distribution chain, require firms to disclose to the consumer the total remuneration taken across that chain, so that the cost of placement is visible and contestable. (Question 3)
R7. A durable successor to Flood Re. Begin now to develop a successor to Flood Re, ahead of its closure in 2039, designed as permanent national infrastructure rather than a further temporary scheme, and integrating insurance availability with flood-defence investment, planning policy and resilient building standards. (Questions 4 and 8)
R8. A comparative review of permanent catastrophe schemes. Commission a focused comparative review of the permanent catastrophe schemes operating in continental Europe - notably France's CatNat regime and Spain's Consorcio de Compensación de Seguros - to inform the design of the successor to Flood Re. (Questions 4 and 8)
R9. Monitor availability and affordability. Recognise the availability of essential insurance as an explicit public-interest objective of the framework, and task the FCA, or another suitable body drawing on the risk-management and actuarial professions, with a regular public report on the availability and affordability of home and travel insurance for higher-risk groups. (Questions 4 and 8)
R10. Long-term care - the cautionary case. Treat the near-total failure of the United Kingdom's private long-term care (dependency) insurance market as the clearest warning of where unmanaged availability problems lead, and ensure that the availability monitoring recommended above identifies lines of cover at risk of similar market exit before it occurs. In the context of the Casey Commission, examine France's model - a recognised public 'autonomy' branch of social security alongside a labelled, common-standards private market - for the role a properly standardised insurance market could play. (Questions 1(a) and 8)
R11. A statutory right to continuity of cover. Establish a binding statutory right, modelled on France's Loi Évin, under which a consumer who was already insured before their insurable risk became known retains the right to continued cover. The right should guarantee continued access on terms comparable to those previously held, without the cover being re-underwritten solely on the basis of the now-known risk, and with any consequent price increase capped by law. It should apply most clearly to travel insurance for consumers who develop a pre-existing medical condition while insured, and the Government should consider its extension to other lines, such as home insurance following a flood claim. This would go decisively beyond the current signposting rules, which direct a consumer toward a specialist market but guarantee nothing. (Questions 4 and 8)
R12. Introduce a 'right to be forgotten'. Following the example of France and of the European Union's 2023 Consumer Credit Directive, legislate a statutory 'right to be forgotten', so that consumers who have recovered from cancer or other serious illness need not, after a defined period, disclose it, and cannot be refused cover or surcharged on account of it, when purchasing insurance or mortgage-related protection. (Questions 1(a) and 8)
R13. Publish claims performance. Publish firm-level claims performance data - claims acceptance rates, average settlement times, cash-settlement usage, complaints, and Ombudsman uphold rates. (Questions 5 and 6)
R14. Oversight of outsourced claims. Require insurers to monitor and evidence outcome metrics for each material outsourced claims handler, to examine remuneration structures for cost-suppression incentives, and to hold named senior managers accountable for outsourced claims. (Question 5)
R15. Discipline cash settlements. Require firms to disclose the basis of cash-settlement calculations, to record the consumer's informed agreement, to assess vulnerability before defaulting to a cash settlement, and to monitor cash-settlement outcomes. (Question 5)
R16. Visible, credible enforcement. Bring and publicise a sufficient number of enforcement cases in consumer general insurance to create credible deterrence, and report to Parliament on the time taken from identifying detriment to securing redress. (Question 6)
R17. A single feedback loop. Strengthen the joint, transparent and timely use of Ombudsman complaints data in FCA supervision, and keep the gap between the Ombudsman identifying a pattern and the FCA acting on it as short as possible. (Question 7)
R18. Safeguard access to the Ombudsman. Monitor the new professional-representative case fee to ensure that it does not deter well-founded complaints, and preserve free direct access to the Ombudsman for consumers. (Question 7)
R19. Firmer footing for vulnerability protection. Consider placing the core protections for vulnerable consumers on a firmer rules-based or statutory footing. (Question 8)
R20. Address under-insurance. Require robust rebuild-cost and contents estimation tools at the point of sale, or limit the application of the condition of average against consumers who answered honestly and with reasonable care. (Question 8)
R21. Guidance on AI in consumer insurance. Issue FCA guidance on the governance of AI in consumer insurance - covering proxy-discrimination testing, a clear prohibition on inertia-based pricing, explainability and human review of adverse automated decisions, and model governance - while keeping AI's consumer effects under review and remaining ready to legislate if guidance proves insufficient. (Question 8a)
Abgalis Limited would welcome the opportunity to give oral evidence to the Committee, or to provide further written detail on any of the matters raised in this submission. This document has been partially written with the use of AI for data points and have been checked for ac
Robert Chanon
Principal Advisor, Abgalis Limited
4 June 2026