PwC comments on the FCA Premium Insurance Market updates

Mohammad Khan, Head of General Insurance at PwC UK comments:

"The FCA's recent updates paint a nuanced picture of the insurance market. Their report on premium increases rightly emphasises the urgent need for insurers to tackle escalating claims costs driven by factors like inflation and supply chain disruptions.  This challenge also presents an opportunity for innovation. By leveraging technology such as automation, data analytics and the latest advances in generative and agentic AI, insurers can streamline claims processing, reduce errors, and improve customer satisfaction.  Transparency in claims handling is paramount, fostering trust and demonstrating a genuine commitment to customer well-being.

Meanwhile, the FCA's interim findings on premium finance, claims handling practices, and pricing across motor, home, and travel insurance offer a mixed bag for consumers.  While no immediate sweeping changes are expected, we predict the downward trend in motor and home insurance premiums will continue, with home insurance potentially falling by 5% to 7.5% and motor insurance by 2.5% to 5% for the rest of 2025.  

However, the FCA's scrutiny of practices like premium finance and claims handling suggests there's still work to be done to future proof the insurance sector.  Their focus on these areas could lead to greater transparency and fairness for consumers in the long run.  Ultimately, addressing these issues head-on will create a more robust and reliable insurance market that benefits both insurers and policyholders."