The House of Lords Financial Services Regulation Committee has published a report damning the complexity of the travel and home insurance markets and questioning the low level of consumer understanding of these sectors, which also have low claims acceptance rates relative to other retail markets.

The report, Home and travel insurance regulation: more for the FCA to do, says the FCA must accelerate its work to improve consumer understanding of home and travel insurance products and set out how it will address poor claims handling practices. It also recommends that the regulator investigates how it can warn consumers about the dangers of relying on AI when buying insurance.

The committee, chaired by The Baroness Noakes DBE, launched its inquiry in May into the regulation of consumer home and travel insurance, with a focus on regulatory input.

Baroness Noakes said: “Comparison websites have made it easier for people to find cheaper insurance, but the lack of good data on other aspects of product value means that many home and travel policies are chosen on price alone.

“The industry and the FCA need to speed up and improve their efforts to help people better understand home and travel insurance, especially what their policies do and do not cover. It is concerning that many of these problems around consumer understanding and comparable data are well known among industry and the FCA, but that significant progress has not yet been made.

“We know that the FCA is undertaking various pieces of work to make progress on many of the issues our report has highlighted, but the timescales are not clear and it should produce a roadmap of what it is doing.”