House of Lords Tells the FCA to Move Faster on Home and Travel Insurance — After Finding Up to 1 in 3 Home Claims Are Declined

The news: The UK's financial watchdog is under pressure to fix home and travel insurance. A House of Lords committee report published on October 23, 2026, titled Home and travel insurance regulation: more for the FCA to do, concludes that the Financial Conduct Authority's flagship Consumer Duty has not yet led to better outcomes for consumers — and calls on the regulator to set out a clear roadmap, with timescales, to improve claims outcomes and consumer understanding. The report followed a five-month inquiry that heard from the FCA, the Financial Ombudsman Service and industry leaders, reported by Insurance Business on October 23, 2026.

The headline numbers: 1 in 3 home claims declined

The report cites FCA figures showing that in 2025, claims acceptance rates ranged from 62% to 71% for home insurance and 83% to 86% for travel insurance — compared with 99% for motor insurance. In plain terms, roughly one in three home insurance claims was not paid out, while car insurance claims were almost never declined. The committee found both products complex and consumer understanding poor, with the consequences only becoming clear when a claim is made.

Why so many claims get turned down

The committee pointed to several linked problems. Policies are complex: exclusions, limits and excesses differ widely between insurers, and consumers often do not realise what they have bought until they try to claim. Price comparison websites have driven intense price competition — good for finding affordable cover, but it has shifted the focus to price over overall value.

Insurers pushed back during the inquiry. The chief executives of Aviva, Admiral and NFU Mutual told peers that most declined claims result from uninsurable events or customer choices at the point of sale rather than insurer conduct, and warned against layering new prescriptive rules on top of the existing Consumer Duty. Baroness Noakes, the committee's chairman, countered: "It is concerning that many of these problems around consumer understanding and comparable data are well-known among industry and the FCA, but that significant progress has not yet been made."

The report also flagged that consumers are increasingly using AI tools to research insurance — tools the FCA does not regulate — adding another route for misunderstanding to creep in.

What the Lords are demanding from the FCA

The committee's core demands are practical rather than theoretical:

• A roadmap with clear timescales for improving consumer understanding and claims outcomes in home and travel insurance.
• Comparable claims data. Right now there is almost no comparable data on anything except price, especially claims outcomes. The committee said that if the industry cannot agree comparable metrics, the FCA should step in and force claims-outcome data into the open — so consumers and comparison sites can finally compare value, not just cost.
• Action on claims handling. The FCA has acknowledged the need for further work on higher-risk practices, including outsourced claims handling and cash settlements. The committee wants the regulator to explain how it will tackle poor handling — and to face scrutiny over its enforcement pace.
• Point-of-sale evidence. Brokers should expect the FCA to look harder at how firms prove customers genuinely understand what they are buying, since price-only buying drives declined claims.

What it means for your next renewal

For UK homeowners and travellers, the message is blunt: the system relies on you to spot the gaps yourself — and one in three home claimants discover the gap too late. If claims-outcome data does become public, it could reshape the market the way price comparison did: insurers with weak acceptance rates would face real pressure, and comparison sites could finally rank value, not just cost.

That change has not happened yet, so your renewal today still depends on reading the fine print. Cheap, price-only renewals are exactly the policies the Lords report says lead to declined claims — in a market where prices have been falling even as claims costs climb. New to cover? Our guide to home insurance for first-time buyers walks through buildings vs contents, when to buy, and the exclusions that catch new owners out.

What to do now: 6 steps

1. Read your exclusions before your next claim, not after. Flood, subsidence, accidental damage and "gradual deterioration" top the list of surprise exclusions on UK home policies. For travel, check medical cover limits, pre-existing condition rules and activity exclusions.
2. Check excesses and single-item limits. Cheap policies often hide a £500+ voluntary excess and low per-item contents limits. List valuables separately if needed.
3. Document your belongings. Claims fail when people cannot prove what they owned or what it was worth. A quick video walkthrough of your home, stored in the cloud, takes minutes and removes one common reason for partial payouts.
4. Ask insurers for their claims acceptance rate. If comparable claims data becomes public, use it. Until then, a direct question costs nothing — an insurer reluctant to answer tells you something too.
5. Keep your own paper trail on outsourced claims. The Lords singled out outsourced claims and cash settlements as higher-risk practices. If a third party handles your claim, keep a written record of every call, reference number and promised deadline.
6. Complain — then escalate. If you believe a claim was wrongly declined, use the insurer's complaints process, then the Financial Ombudsman Service — free, and able to overturn insurer decisions. Many declined claims are settled or reversed once they reach the Ombudsman.

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