Value Divide Persists as FCA Data Reveals Mixed Picture for Insurance Products

▪ Motor insurance continues to deliver strong value, with claims accepted in 99% of cases and payouts averaging 54% of premiums in 2024.

▪ Home insurance performance weaker, with payout ratios averaging 46% and claims acceptance rates falling to 71%.

▪ Personal accident and legal expenses add-ons could be the next product lines to face FCA scrutiny, with low payout ratios and high complaint levels.

The latest analysis of the Financial Conduct Authority’s (FCA) value measures data by market intelligence firm Insurance DataLab reveals a persistent divide in the value delivered by different insurance products.

While headline results for core products such as motor and home insurance remain broadly stable, significant variation persists across the wider market – particularly among add-on products.

Motor insurance continues to perform strongly, with 99% of claims accepted and payouts averaging 54% of premiums in 2024. Home insurance results were weaker, with payouts averaging 46% of premiums and claims acceptance falling to 71%, while 11% of customers lodged a complaint.

Personal accident add-ons recorded an average payout ratio of just 23%, while before-the-event home legal expenses insurance saw only half of claims accepted and one in ten claims resulting in a complaint.

GAP insurance, previously one of the weakest-performing products, recorded a payout ratio of more than 100% of premiums following regulatory intervention. However, this increase reflects lower premium volumes rather than an improvement in product performance.

Some add-ons continued to deliver strong value. Motor legal protection performed particularly well, with 96% of claims accepted and minimal complaints, while healthcare cash plans paid out 69% of premiums with an average of more than two claims per policy per year.

Insurance DataLab co-founder Dan King commented: “The overall stability in this year’s FCA data hides a deeper divide in the value customers receive. While core lines such as motor remain consistent, too many add-on products still deliver limited value or low claims acceptance.

“In the age of Consumer Duty and an increasingly interventionist regulator, insurers must ensure their products deliver genuine value for money. Those involved in personal accident and legal expenses add-ons should be particularly mindful given it would be no surprise if these products are next on the FCA’s watchlist. Those that can prove good outcomes for policyholders will not only meet regulatory expectations, but also strengthen customer trust and loyalty.”