Three years after implementation, the challenge for insurers is no longer Consumer Duty compliance; it is demonstrating, with credible evidence, that customers are consistently receiving good outcomes. FCA commentary throughout 2026, including its latest three publications Products and Services, Consumer Support and Price and Value: Good Practice and Areas for Improvement, (10 July 2026), reinforces a clear supervisory expectation: firms must move beyond reporting activity and provide evidence that outcomes monitoring is driving real customer benefit.
Our research, Compliance, to Culture, to Customer Outcomes, suggests many firms are still bridging the gap between having an outcomes monitoring framework and being able to prove that it works in practice. While most firms believe their monitoring is robust, fewer than half undertake direct customer outcome testing, creating a disconnect between governance confidence and customer-level evidence.
Insurance-specific considerations
Consumer Duty applies across regulated financial services, but several features of the insurance market make evidencing outcomes more complex:
The distribution chain: Manufacturers are accountable for outcomes delivered through brokers and appointed representatives, so the quality of that relationship is now directly linked to the evidence a firm can produce. Building data-sharing into co-manufacturing agreements from the outset – rather than relying on annual attestations – is where the FCA sees most room for improvement, and where firms have most room to differentiate.
Legacy books and fair value: Every insurer carries business written under older pricing models. Revisiting it through a fair value lens is portfolio stewardship, not remediation – an opportunity to correct underserved customers before the regulator has to point it out, as it did in GAP insurance.
Value that isn’t always visible: A claim many customers never make is hard to price on visibly, and comparison sites push firms toward competing on premium alone. Firms who can tell a fuller story covering breadth, claims acceptance rates, settlement times and post-claims experience can ensure genuine points of difference that price alone can’t offer.
Consumer understanding of complex products: Exclusions and cover definitions are hard to convey simply, and the Duty’s bar is understanding, not disclosure. The FCA’s March 2026 review asserts that sales completion tells firms little to nothing about whether that bar has been met. Firms treating this as product and communications design, not documentation, build clarity that reduces disputes at the point of claim.
Vulnerable customers at scale: Large books with limited day-to-day contact mean vulnerability support has to work for volume, not relationship depth. Data insurers already hold – payment patterns, claims characteristics and contact signals – can identify and support customers at a scale few other sectors can match.
Monitoring with little contact: Many customers have little contact with their insurer between inception and renewal, and for some the only substantive interaction will be a claim, so a single moment can carry a lot of weight in the overall picture of whether they got good value and fair treatment. That rewards monitoring frameworks built to draw real conclusions from the touchpoints that exist across the relationship (not just at claim) rather than a regular, static MI pack.
What Our Own Research Tells Us
Square 4’s Consumer Duty research, Compliance, to Culture, to Customer Outcomes, drawn from a 2026 survey of 31 UK financial services firms and supplemented by a tailored version of YouGov’s Consumer Duty Index, gives a useful cross-sector reference point. It shows that some challenges traditionally thought of as insurance-specific actually span the market, while reinforcing that some challenges do remain insurance-specific.
The clearest finding is a gap between outcomes monitoring and testing. Across the sample, roughly 7.7 firms in 10 agreed they had a robust approach to outcomes monitoring in place. But when asked specifically whether their monitoring framework included direct customer journey outcomes testing, rather than monitoring built from existing data and reporting, that fell to around 4.3 in 10.
In other words, fewer than half of firms across the sample are actively testing outcomes at the customer journey level, even though a strong majority believe their monitoring is robust. This speaks to an industry-wide gap between confidence in governance and the more labour-intensive work of testing outcomes directly, and is not unique to insurance.
Our thematic analysis of firms’ own stated priorities backs this up. Outcomes monitoring and testing was the single most commonly cited priority across the sample, mentioned by more than two-thirds of firms who responded, followed closely by MI and data quality, and then technology and automation. Firms across the market are telling us in their own words that this is where the work still needs to happen.
Where insurance-specific factors do bite is in the distribution chain and vulnerable customer findings, which is consistent with the FCA’s own commentary. Firms operating through longer or more complex distribution chains in our sample tended to show a wider gap between their governance scores and their outcomes monitoring scores – they were strong on paper, but thinner on evidenced customer-level outcomes. That pattern aligns closely with what the regulator has said publicly about insurance.
This is also the theme of our wider Consumer Duty in 2026 research, produced with YouGov: across an 8,000-consumer dataset, we found a persistent confidence gap between what firms believe they are delivering and what consumers report actually experiencing. Firms that had invested in governance and board reporting were not necessarily the firms whose customers reported the best outcomes – the two measures do not automatically move together, and insurers with complex distribution and thin customer contact are arguably the segment most exposed to that gap.
Practical Steps
Move from monitoring to testing: If your outcomes framework is built primarily from existing MI – complaints, claims data, call listening – treat that as a first layer, not the finished product. Direct customer journey testing, even on a sample basis, is what the FCA and our own data both point to as the differentiator between firms that can evidence outcomes and firms that can only describe a framework.
Extend evidence into the distribution chain deliberately: Co-manufacturing agreements should specify what data intermediaries provide and how often. Where a distributor cannot provide adequate outcomes data, that gap should be visible to the board as a risk, not absorbed as a limitation of the relationship.
Build a fair value case that isn’t just the premium: Cover breadth, claims acceptance rates, settlement times and post-claims satisfaction are all evidence of value that a bare price comparison doesn’t capture. Where a product can’t make that case even with this fuller picture, this may be worthy evidence that direct action is needed.
Test understanding, don’t just measure disclosure: The FCA has been explicit that events and metrics such as sales completion and low complaint volumes are not evidence that customers understood their cover. Comprehension testing with real customers, focused on the moments of highest complexity, including exclusions, renewals and the claims process, is the more credible alternative.
Design vulnerability identification for volume: Where customer contact is thin, data-driven identification such as payment patterns, claims characteristics and contact centre signals will do more than a model built around demonstrating relationship ‘depth’. Track outcomes for identified vulnerable customers separately and report them to the board on their own terms.
Report in a way that invites challenge: Several of the FCA’s own findings this year single out board reporting that presents data without drawing conclusions from it. A board report that shows a chart of complaint volumes is not the same as a board report that says what those complaint volumes mean for customer outcomes (for example, cohort-level insight) and what the firm is doing about it.
Where this leaves insurance firms
For insurers, the challenge is no longer implementing Consumer Duty—it is proving that it is working. Firms unable to demonstrate clear evidence of good outcomes may face increased regulatory scrutiny, intervention and enforcement activity.
Square 4 works with insurers to assess Consumer Duty maturity, strengthen outcomes monitoring frameworks, and provide Board-level assurance over customer outcomes. If you would like an independent review of your Consumer Duty arrangements or support responding to the FCA’s latest expectations, contact us as hello@square4com.
