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Dear CEO | Release Date: 20th September 2023

To read a shorter summary of this Dear CEO letter, click here.

To access the original FCA document, click here.

Long Summary

The Financial Conduct Authority (FCA) is committed to updating you on the key priorities for the insurance market spanning 2023-2025, focusing on identifying and mitigating potential risks. This directive encompasses all sectors of the insurance market, including personal, commercial, and wholesale insurance, with a particular focus on Lloyd’s and London Market Insurance Intermediaries and Managing General Agents.

Sector Overview

The insurance market plays a crucial role in the UK’s economy by offering essential services to millions of consumers and businesses. It comprises personal and commercial lines that provide necessary financial protection, wholesale insurance services that manage risks globally, and life insurance products that support financial needs into retirement.

In 2021, the wholesale insurance market significantly contributed to the economy by covering extensive risks and generating around £55bn in Gross Written Premiums (GWP). Life insurers manage substantial assets, indicating the sector’s vast influence and responsibility in supporting the UK’s financial stability.

Challenges Facing the Insurance Market

The market is currently navigating numerous challenges intensified by the aftermath of COVID-19, economic pressures from rising living costs, and shifting interest rates. Additional complexities arise from climate change and technological advancements, which could potentially heighten existing risks. Ensuring accurate and comprehensive data to assess these risks remains a pivotal priority for the FCA.

Strategic Objectives and Failings

The primary aim under the Financial Services and Markets Act (FSMA) is to enhance the functionality of financial markets, ensuring they support consumer needs effectively, particularly during crises. However, the FCA has identified prevalent issues within the market, including unfair value products, discriminatory pricing, and inadequate claims handling, prompting a need for stringent supervisory actions.

Market-Wide Priorities

Setting and Testing Higher Standards

The focus here is on reinforcing governance and cultivating a culture that aligns with the ethical standards expected in the insurance industry. Firms are encouraged to foster a diverse and inclusive workforce, enhancing their understanding of consumer needs and market demands.

Operational Resilience

Firms must enhance their operational resilience to effectively prevent, adapt, and respond to disruptions, ensuring robust governance and oversight, particularly concerning outsourced services.

Consumer Duty

There is a strong emphasis on integrating Consumer Duty into business models to ensure products and services are developed with the consumer’s best interest at heart. This involves detailed assessments of product value, consumer understanding, and support mechanisms.

Improving Oversight of Appointed Representatives

The FCA aims to improve the management and oversight of Appointed Representatives by enforcing robust standards and ensuring these entities comply with regulatory expectations.

Sector-Specific Priorities for Wholesale Insurance

Promoting Competition and Positive Change

Efforts will be made to enhance the competitiveness of the London market, a critical hub for global insurance needs. This involves adapting to regulatory changes and engaging with market participants to foster growth and innovation.

Strategy for Positive Change: Governance and Culture

The wholesale market needs to address issues related to non-financial misconduct, ensuring firms have appropriate measures to handle such behaviours and maintain a healthy work culture.

Operational Resilience

The necessity for solid operational resilience plans is underscored, with a focus on managing risks associated with cyber-attacks and data security, especially given the market’s reliance on digital platforms.

Cyber Insurance

As cyber threats grow, the FCA expects firms to ensure that cyber insurance policies are clearly worded and truly meet the customers’ needs, avoiding any misalignments between customer expectations and policy outcomes.

Action Required

Firms are urged to actively align their operations with these priorities, ensuring that management practices, product designs, and consumer interactions meet the elevated standards set forth by the FCA. Compliance with these directives is expected to be demonstrable, with firms prepared to adapt to regulatory changes swiftly to avoid potential enforcement actions.


The FCA’s detailed guidance for 2023-2025 provides a clear roadmap for insurance firms, aiming to enhance operational efficacy and consumer protection measures. By adhering to these guidelines, firms can ensure compliance with regulatory expectations and contribute positively to the broader financial ecosystem, supporting both economic stability and consumer well-being.

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