FCA seeks views on how to help close the protection gap

The Financial Conduct Authority (FCA) has called on the insurance industry to help more consumers access products that support them and their families if they become critically ill or die.

The interim findings of its competition review of pure protection products found that, for those consumers that have taken out protection insurance, the market mostly works well. There are a wide range of products, most consumers can claim when they need to, and the costs of cover have remained stable in the last few years.

But 58% of adults do not hold a pure protection product even though many could benefit from them. The FCA wants to help close this gap.

Research suggests that the gap exists because consumers aren't aware of their needs and aren't prompted to consider them. Other issues include ability to pay, misunderstandings about the product or improvements needed in the sales process.

The FCA is exploring what more can be done, working with industry and other stakeholders, to better support consumers. 

Graeme Reynolds, Director of Competition and Interim Director of Insurance at the FCA, commented: 

“These insurance products play a vital role in helping families manage some of the most difficult experiences in life. While competition in the market is mostly working well for consumers, many more people could benefit from protection. We will work with industry to reduce this gap, to help consumers navigate their financial lives.” 

The FCA has seen examples of firms delivering good value for consumers and will look more closely with updated 2025 data ahead of the final report.  

The FCA will also consider ways to improve product switching so firms make sure any switch clearly benefits the consumer and meets their needs.  

The FCA welcomes feedback on its interim findings by 31 March 2026. A final report will be published in Q3 2026, setting out final findings and an update on progress. 

Notes to Editors 

• Read the interim report.
• Pure protection insurance refers to products that provide financial support if a specified event happens to the policyholder or their dependants. These products do not include any savings or investment component. Premiums are used solely to provide cover. 
• Pure protection products typically include:
  • Life insurance – pays out on death or terminal illness.
  • Critical illness insurance – pays a lump sum if the policyholder is diagnosed with a specified serious illness. 
  • Income protection insurance – provides regular payments if someone is unable to work due to illness or injury. 
• These products help consumers and their families manage financial shocks associated with bereavement, serious illness or losing the ability to work.
• Pure protection products are distinct from policies with an investment or savings element, such as endowments or investment-linked policies. Those products combine protection with a financial return; pure protection products do not.