The FCA’s recent regulatory priority guidance shows that it’s keen not to constrain the market, but rather to see a vibrant and innovative insurance sector, and this presents some great opportunities for growth.

However, the FCA also makes it clear that it still sees a need for additional assessment and understanding in the claims space, particularly in the delegated authority area. Highlighting the travel and home markets in particular, it questions if customers fully understand their coverage and what their policies offer. 

The market may feel that it has done a significant amount of work here and that a more holistic FCA assessment of the entire service chain would be fairer. But recent industry analysis, not least the Clyde and Co MGA report, confirms that several entrenched weaknesses remain unaddressed in the claims handling arena. And this is prompting greater regulatory attention.

This sharpened focus on claims management and delegated authority arrangements spans insurers, TPAs and loss adjusters alike and indicates a clear regulatory pivot towards strengthening governance, transparency and outcome focused oversight across the insurance value chain.

A higher benchmark 

A persistent theme is the misalignment between delegated operational models and insurers’ regulatory responsibilities. Many firms still treat delegated claims handling as a commercial arrangement rather than a regulated outsourcing function. This can result in insufficient due diligence, weak MI, and unclear responsibility frameworks. And supply chain gaps can increase conduct risk, particularly when providers are operating within complex supply chains or sub delegated models.

The FCA’s position is driving a rebalancing of delegated authority oversight. And carriers will be the first port of call for the FCA if there are any issues, even if TPAs and suppliers were appointed by others further down the chain.

For insurers, TPAs and adjusters alike, this represents a call to enhance governance frameworks, improve data quality, clarify contractual obligations and elevate customer outcomes above operational convenience. And, as Lloyd’s continues to uplift its DCA governance regime, a higher benchmark is being set for the wider market.

So, what next?

We know that the focus needs to be set firmly on fair customer treatment, communication quality, claims timeliness and TPA oversight. But how can the market ensure that claims service is truly aligned with the objectives of MGAs and other stakeholders?

Customer feedback and surveys alongside comprehensive claims data collection and analysis, not just for single claims but for whole portfolios, will all play an important part here. So too will audit reviews. The latter can help ensure that carriers, underwriters and MGAs have frameworks in place to provide the insights necessary to effective governance over delegated authority arrangements with TPAs, adjusters and other service providers. As a result, they can provide protection from regulator criticism. 

What’s clear is that firms demonstrating clear control and structured oversight of outsourced claims activities, ensuring that external partners meet the same standards as they require internally, will reduce regulatory exposure and deliver more consistent customer experiences. Conversely, persistent weaknesses are increasingly likely to trigger intervention. And those that fail to adapt will face not just increased scrutiny but also potential enforcement.