BCIS backs FCA super-complaint response urging focus beyond claims handling

The Financial Conduct Authority’s (FCA) response⁽¹⁾ to Which?’s super-complaint on home insurance claims reinforces the need to look beyond claims⁽²⁾ handling alone, with BCIS pointing to rebuild cost selection and underinsurance as increasingly important factors shaping outcomes.

Richard MacLean, executive director at BCIS, said he agrees with the FCA’s assessment that improving consumer understanding is central to better outcomes, and noted that insurers are already investing heavily in clearer sales processes, improved management information and greater transparency for customers.

In its response to Which?, the regulator said it will expand work already under way to improve consumer outcomes in home insurance, including stronger oversight of claims handling and further scrutiny of how policies are sold and explained to customers. The FCA also reiterated its focus on Consumer Duty, highlighting the need for clearer information and better support throughout the insurance journey.

‘Insurers are clearly moving to strengthen how policies are sold and explained, in line with Consumer Duty expectations,’ MacLean said. ‘That work is necessary, but it also comes with increased operational costs for insurers in an already competitive market.’

He outlined how rebuild cost selection is a common point of weakness in the customer journey.

‘Many homeowners continue to rely on market value, outdated sums, insured or informal ‘rules of thumb’ that can be found online, rather than robust assessments of reinstatement cost,’ he said. ‘Rebuild cost is not the same as market value, and generic or ballpark estimates rarely reflect the real cost of repairing or rebuilding a home. Where a property is underinsured, claims outcomes can be challenging even when insurers are applying policy terms correctly. Ultimately, policyholders have a responsibility to ensure the sum insured reflects the true cost of reinstatement.’

The FCA has cautioned against reading claims acceptance rates in isolation, noting that lower rates in home insurance partly reflect policy complexity and gaps in consumer understanding. MacLean said this distinction is important, as underinsurance can result in claims being reduced or declined without any failure in claims handling.

BCIS data show rebuilding costs continue to rise. The ABI/BCIS House Rebuilding Cost Index, which measures changes in the cost of rebuilding a typical house using current prices for labour, materials and plant, increased by 3.8% between December 2024 and December 2025.

MacLean added: ‘As construction costs continue to increase, keeping sums insured aligned with robust, construction-specific reinstatement cost data is essential. Better understanding at the point of sale, combined with regular review, will be key to reducing disputes and improving outcomes for both insurers and customers.’

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^{(1) FCA – FCA expands insurance work in response to Which? super complaint  - here}

^{(2) Which? – Which? launches insurance ‘super-complaint’  - here}