FCA targets protection gap as 58% of adults lack cover

What the FCA found

On 21 September 2026 the FCA published the final report of its Pure Protection Market Study (MS24/1.5). The study examined how protection insurance is sold and whether the market delivers good outcomes. Its central finding is a split picture. For consumers who already hold protection insurance, the FCA said competition works well. That means the market is not, in the FCA's view, failing the people who have already bought cover. The regulator did not identify a need for new market-wide rules to fix how protection is sold to existing customers.

The gap sits elsewhere. Around 58% of adults have no life insurance, critical illness cover or income protection, and 59% of that group has never considered it. That is a large share of the adult population without any of the three main protection products. The FCA's conclusion is that the problem is not primarily how cover is sold to people who are already in the market, but that a majority of adults are not in the market at all. The report therefore focuses on awareness and prompting rather than on new sales rules. Graeme Reynolds, FCA director of competition, said competition works well for existing customers and the FCA is working with partners to increase coverage.

What happens next: prompts at life events

Instead of new rules, the FCA is working with partners to prompt people to think about protection at key moments. The Money and Pensions Service and the Digital Property Market Steering Group will prompt people to think about protection at key moments such as becoming a parent or buying or renting a home. These are the points at which a household's financial responsibilities change and protection is most likely to be relevant. The aim is to reach people who have never considered cover, rather than to change the way existing customers are served.

Two further workstreams sit alongside those prompts. The Protection Distributors' Group will lead a consumer awareness campaign targeted at groups less likely to take out protection. The Association of Mortgage Intermediaries will lead work to help advisers improve how they discuss protection with customers. On timing, the FCA said work will start by the end of 2026, it expects meaningful progress over the next 12 to 18 months and will publish a short progress update by the end of 2027. The FCA will also hold a webinar for firms on misunderstandings about its rules, work with the Association of British Insurers to reduce delays in obtaining medical records, and run a TechSprint; firms should express interest by 13 November.

Who is most likely to be unprotected

The FCA's work focuses on groups disproportionately unprotected: renters, the self-employed and gig economy workers, people on lower incomes and people with pre-existing medical conditions. These groups are less likely to hold life insurance, critical illness cover or income protection. The reasons vary. Renters may not encounter protection discussions at the point of buying a home in the same way that mortgage borrowers do. The self-employed and gig economy workers do not usually pass through an employer's benefit arrangements. People on lower incomes may have less room in a household budget. People with pre-existing medical conditions may face different underwriting outcomes or assume cover is unavailable.

The FCA's chosen approach reflects that pattern. The prompts at life events, the consumer awareness campaign led by the Protection Distributors' Group and the adviser work led by the Association of Mortgage Intermediaries are all aimed at reaching people who are less likely to take out protection. The FCA is not proposing product-specific interventions for these groups in the final report. Instead, it is relying on partners to raise awareness and on advisers to improve conversations. The FCA said it will act where firms fall short, which leaves open the possibility of supervisory action if firms do not meet its expectations.

Switching, claims and fair value

The FCA published findings on switching, claims experiences and fair value. It reminded firms of Consumer Duty and product governance requirements. It is not planning new market-wide measures. The regulator said it will act where firms fall short. That combination means the rules for firms are not changing as a result of the study, but the FCA expects firms to apply existing requirements to protection products. Consumer Duty requires firms to deliver good outcomes for retail customers, and product governance requirements cover how products are designed, approved and reviewed.

On claims, the FCA is working with the Association of British Insurers to reduce delays in obtaining medical records. Delays in gathering medical evidence can slow down claims decisions, and the FCA's work with the ABI is aimed at that specific friction. The FCA will also hold a webinar for firms on misunderstandings about its rules and run a TechSprint, with firms asked to express interest by 13 November. For households, the practical effect is that the framework for switching, claims handling and fair value remains as it is, with the FCA monitoring and intervening where it finds firms falling short rather than introducing new market-wide rules.

What it means if you have no cover

For a household with no protection in place, the FCA's report does not change what the products are. Life insurance pays out a lump sum on death or, for some policies, on diagnosis of a terminal illness, according to the FCA's description of the market. Critical illness cover pays out a lump sum if the policyholder is diagnosed with a specified serious condition. Income protection pays out a regular income if the policyholder cannot work because of illness or injury. These are the three product types the FCA's study covers, and they are the products counted in the 58% figure for adults with no cover.

The FCA's report does not recommend any of these products to any household. It sets out that around 58% of adults have none of them and that 59% of that group has never considered them. The FCA's response is to prompt consideration at life events, through the Money and Pensions Service and the Digital Property Market Steering Group, and through awareness and adviser work led by industry bodies. Whether any particular household needs cover, and which type, depends on its circumstances. The FCA's stated aim is to increase coverage by making people aware of protection at the moments when it may become relevant, not to direct consumers towards specific products.

Source: FCA press release.

Related coverage on Kael Tripton: Which type of life insurance: level, decreasing, whole of life and family income benefit, Non-disclosure and refused life insurance claims: what the 2012 Act says and how the ombudsman decides, Life insurance vs income protection: what each pays, when, and which risk is bigger, Before You Buy Holloway Friendly Income Protection: Own Occupation Definition, Deferred Period and What to Check, Critical illness cover: what the claims data shows about payouts, refusals and the conditions that matter.

Frequently asked questions

What did the FCA's Pure Protection Market Study find?

The FCA published the final report of its Pure Protection Market Study (MS24/1.5) on 21 September 2026. It said competition works well for consumers who already have protection insurance. It also found that around 58% of adults have no life insurance, critical illness cover or income protection, and 59% of that group has never considered it.

Is the FCA introducing new rules for protection insurance?

The FCA is not planning new market-wide measures. It published findings on switching, claims experiences and fair value, reminded firms of Consumer Duty and product governance requirements, and said it will act where firms fall short.

What is happening instead of new rules?

The FCA is working with partners to prompt people at life events. The Money and Pensions Service and the Digital Property Market Steering Group will prompt people to think about protection at key moments such as becoming a parent or buying or renting a home. The Protection Distributors' Group will lead a consumer awareness campaign, and the Association of Mortgage Intermediaries will lead work to help advisers improve how they discuss protection with customers.

Which groups are least likely to have protection cover?

The FCA's work focuses on groups disproportionately unprotected: renters, the self-employed and gig economy workers, people on lower incomes and people with pre-existing medical conditions.

When will the FCA's protection work start and when will progress be reported?

The FCA said work will start by the end of 2026. It expects meaningful progress over the next 12 to 18 months and will publish a short progress update by the end of 2027.