The protection opportunity: unlocking innovation

The Financial Conduct Authority (FCA) has published its long-awaited interim report from its Pure Protection Market Study. For anyone working in protection, it’s required reading – setting out what’s working well today and, more importantly, where the market has the opportunity to go further.

The report offers welcome reassurance that the protection market is delivering good outcomes for existing policyholders. High claims acceptance, low complaint levels and strong customer satisfaction all reinforce the value protection provides, but the message is clear: this is not a moment for complacency. It’s a platform to build from, and a prompt to reach those who are still left unprotected.

With better data, governance and collaboration, the industry can close the UK’s longstanding protection gap without the need for heavy-handed regulatory intervention.

Scott Machin commenting: 

The FCA has effectively given the industry a vote of confidence, but also a clear responsibility to help close the protection gap. This is a moment to demonstrate leadership, and to not wait around for direction.

No blunt intervention – but clear expectations

Many across the industry had expected the FCA’s interim findings to point to changes to loaded premium or more disruptive intervention. That hasn’t materialised. Instead, the FCA opted for a proportionate approach, reinforcing that the fundamentals of the protection market work, while signalling where better reporting, consistency and data are needed. 

By stepping back from blunt reform, the regulator has created space for the industry to focus less on remediation and more on progress. The emphasis now shifts to how protection is delivered, understood and accessed at scale - where innovation belongs. Far from being a damp squib, this is a clear signal to focus on the biggest opportunities and let innovation close a long‑standing gap.

Innovating with strong foundations is a must

If the industry is serious about closing the protection gap, innovation must play a leading role. Digital journeys, targeted support and AI‑enabled tools all have the potential to reach more people, earlier and more effectively. But their impact depends on what they are built on. Innovation delivers most when it sits on solid foundations: consistent data, standardised integrations and transparent processes.

The opportunity is huge. The FCA says that 58% of adults with online access lack protection, of which more than three-quarters have never even considered their needs, or lack confidence in their understanding or encounter barriers along the way. It estimates that a remarkable 72% of needs are currently unmet.

Thoughtful innovation can change that - surfacing protection at the right moments, simplifying complex journeys and supporting people with different needs - provided it is delivered in a consistent and responsible way. This is the direction the FCA is encouraging. Nudges tied to life events, expanded targeted support and the careful use of AI are all highlighted as ways to help consumers engage earlier and with greater confidence, without increasing mis‑selling risk or excluding vulnerable groups. These are not isolated ideas; they work best when they can be applied broadly and reliably.

That is where strong foundations matter most. Integration standards reduce friction. Consistent data enables scale. Clear processes create trust. Together, they allow new tools and approaches to move more effectively.