UK FCA Pure Protection Study Finds 58% of Adults Lack Cover, Pushes Industry to Close Protection Gap

The UK's Financial Conduct Authority (FCA) has delivered a broadly reassuring but action-oriented assessment of the country's pure protection insurance market, while highlighting a significant coverage gap that it wants the industry to help close. The FCA published the interim findings of its Pure Protection Market Study (MS24/1) on January 29, 2026, with stakeholder workshops held through spring and a final report scheduled for Q3 2026.

Pure protection products — which include term life insurance, critical illness cover, income protection, and whole-of-life policies — provide financial support to consumers and their families in the event of death, serious illness, or inability to work. The FCA's interim findings indicate that for the consumers who already hold these products, the market mostly works well. There is a wide range of products available, the cost of cover has remained stable in recent years, and claims outcomes are strong: the FCA found an average 98% claims acceptance rate and very low complaint levels, with just 515 complaints upheld out of 13.8 million policies in force. As of 2023, there were over 22 million in-force pure protection policies in the UK.

The central concern is the protection gap. The FCA found that 58% of adults do not hold any pure protection product, even though many could benefit from one. Research suggests this gap exists because consumers are unaware of their needs and aren't prompted to consider them, alongside issues of affordability, product misunderstanding, and sales process shortcomings. The FCA has called on the insurance industry to work collaboratively to help more consumers access these products.

Importantly for insurers, the FCA opted against interventionist remedies. It explicitly did not propose banning products or commissions, or introducing pricing interventions. The regulator did not find evidence that 'loaded premiums' — where higher commissions are negotiated to feature on restricted panels — result in worse pricing for consumers. However, the FCA flagged areas for improvement, including better monitoring of commission structures that could incentivize unnecessary policy switching ('churning'), and noted that income protection products have notably lower claims ratios than other pure protection products, which firms should factor into their fair value assessments under the Consumer Duty. The market is highly concentrated, with around five firms accounting for roughly 80% of provision.