The Financial Conduct Authority’s first Insurance Regulatory Priorities Report, published in February 2026, is a useful reminder that insurance regulation is not merely a matter for insurers and brokers. For policyholders, particularly businesses with complex programmes or substantial claims, the FCA’s priorities provide important context when assessing claims handling, policy performance and insurer conduct.

Here we consider the principal themes emerging from the FCA’s current approach and explain why they matter to corporate insureds, including those facing disputed claims, delayed payments or uncertainty over emerging risks such as cyber and artificial intelligence.

A shift in regulatory approach

The FCA’s new Regulatory Priorities reports replace the previous portfolio letter system and are intended to set out the regulator’s expectations in a more consolidated form. That change in presentation is significant, but the substance is more important: the regulator is signalling closer scrutiny of whether insurance products operate as policyholders reasonably expect, particularly at the point of claim.

The FCA’s message is therefore relevant not only to firms subject to regulation, but also to insured businesses. Where an insurer’s approach to a claim appears slow, opaque or inconsistent with the policyholder’s reasonable understanding of the cover, the regulatory backdrop may form part of the wider strategic context in which the claim is advanced.

Claims handling remains front and centre

Claims handling and service quality remain central themes. Although much of the regulatory language is directed at consumer and SME outcomes, the underlying concern is familiar to commercial policyholders: the real value of an insurance policy is tested when a claim is made.

For corporate insureds, that means insurer conduct during the claims process should be considered carefully. Delays, inconsistent requests for information, unexplained reservations of rights or reliance on technical points may all affect the commercial management of a claim. They may also sit uncomfortably with a regulatory environment increasingly focused on fair, prompt and transparent outcomes.

Business interruption: the long tail continues

Business interruption insurance remains a live issue. The FCA Covid 19 Test Case resolved many important questions, but it did not end all disputes. Policy wording, causation, aggregation, loss calculation and limitation continue to require careful analysis.

The issues exposed by the pandemic also have wider application. Non-damage business interruption, denial of access, supply chain disruption and regulatory interference remain relevant to modern commercial risks, including cyber incidents and operational disruption caused by events outside the insured’s physical premises.

The continuing importance of policy wording

Recent insurance disputes continue to demonstrate that coverage often turns on the precise words used in the policy. Warranties, conditions precedent, notification provisions, exclusions and aggregation language can all have decisive consequences.

That is particularly important for businesses with layered insurance programmes or specialist policies. At placement stage, insureds should ensure that the presentation of risk is accurate and properly documented. At claims stage, they should test carefully whether the insurer’s construction of the policy is justified.

Recent decisions concerning warranties, conditions precedent and corporate knowledge also underline the need for internal discipline. A technical breach or incomplete disclosure record may give insurers arguments that could have been avoided with clearer procedures and better audit trails.

Emerging risks: AI and cyber exposures

Cyber and artificial intelligence risks are likely to generate further coverage disputes. Policyholders should not assume that traditional property, business interruption, professional indemnity or cyber policies will respond neatly to losses involving automated systems, data incidents, outsourced technology providers or AI-enabled decision-making.

The practical risk is that exclusions, sub-limits and coverage triggers may not have kept pace with the way businesses now operate. Broadly drafted AI exclusions or uncertain cyber wording may create gaps between the insured’s operational risk and the protection actually available under the policy.

A pro-growth regulator is not necessarily a softer regulator

The FCA has emphasised growth, innovation and simplification. However, that should not be mistaken for a reduced focus on outcomes. The regulatory direction appears to be one of proportionate supervision for firms meeting expectations, coupled with more decisive action where poor outcomes persist.

For policyholders, this may be relevant where there is a pattern of poor claims handling, inadequate communication or an insurer position that appears inconsistent with the policy’s commercial purpose. Regulatory considerations will not determine coverage, but they can inform the broader strategy for pursuing a claim.

What should policyholders do now?

Businesses should treat the FCA’s priorities as an opportunity to review both their current insurance arrangements and their claims strategy. In particular, policyholders should consider the following practical steps:

First, review business interruption cover, including indemnity periods, sums insured, non-damage extensions and any remaining historic Covid-19 issues. Secondly, scrutinise policy wording at renewal, especially warranties, conditions precedent, exclusions, aggregation language and notification obligations. Thirdly, ensure that placement and disclosure processes are properly documented. Finally, assess whether cyber and AI risks are adequately covered across the insurance programme, rather than assuming that existing policies will respond.

Comment

The FCA’s 2026 priorities confirm that claims outcomes, policy clarity and fair value remain at the forefront of regulatory attention. For commercial policyholders, the key point is practical: insurance should be actively managed before, during and after a claim.

Where a claim is delayed, declined or narrowed by reliance on technical policy points, insureds should consider both the wording and the wider conduct of the claim. A well-prepared policyholder, with clear records and an early strategy, will be better placed to challenge an insurer’s position and maximise recovery.

If you have any questions about a disputed insurance claim, policy wording issue or renewal review, please contact a member of Edwin Coe’s Insurance Disputes team.

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