New Financial Conduct Authority (FCA) data has revealed a widening gap in the value consumers receive across different insurance products, raising fresh concerns about whether some policies justify their cost. While core insurance categories such as motor insurance continue to perform well, the latest analysis by Insurance DataLab indicates that certain add-on insurance products offer far weaker payouts and lower claim acceptance rates.
The findings are part of the FCA’s value measures reporting, introduced to increase transparency and ensure customers are receiving fair value following the rollout of Consumer Duty regulation.
Motor insurance continues to deliver strong outcomes, with 99% of claims accepted and insurers paying out an average of 54% of premiums. But the FCA’s data highlights a very different picture for certain add-on products, where claims acceptance rates and payout ratios fall dramatically.
Andrea Troy, spokesperson for Free Price Compare, says: “Motor insurance remains one of the most reliable general insurance products when it comes to claims getting paid. What’s worrying is how inconsistent the experience can be once you add bolt-ons that are supposed to offer extra protection.”
Motor insurance stays strong — but add-ons show the weakest value
The study found that while core car insurance remains stable, add-ons sold alongside policies are delivering limited value. Personal accident add-ons paid out just 23% of premiums on average, and before-the-event home legal expenses insurance accepted only half of all claims. One in ten customers lodged a complaint.
By contrast, motor legal protection performed well, with 96% of claims accepted and minimal complaints.
The variation highlights the need for motorists to review what is included in their policy, rather than assuming every add-on provides value. Many drivers now start by reviewing different policy options using tools that help them compare car insurance deals before adding any extras.
Andrea Troy adds: “Consumers often buy add-ons automatically during the checkout process without questioning whether the cover is useful or good value. Data like this is a wake-up call to scrutinise what you’re paying for.”
Car insurance premiums are falling — but claims costs remain high
The FCA data also gives insight into broader market conditions. After years of steep price increases, average comprehensive car insurance premiums fell to around £735 in September 2025 — a drop of 16% year-on-year and 26% below the December 2023 peak of £995.
Despite falling premiums, claims costs remain high. Insurers paid out £11.7 billion in motor claims last year, driven by repair cost inflation, rising theft rates and a slowdown in replacement parts availability.
These pressures influence how insurers price policies and determine the value offered to customers. For some, the priority is identifying reputable car insurance providers with transparent cover rather than simply opting for the lowest monthly premium.
GAP insurance sees unusual improvement — but for the wrong reasons
GAP insurance, one of the poorest-performing products in previous years, posted payout ratios above 100%. On the surface, this suggests strong value for customers. However, Insurance DataLab notes that the improvement reflects lower volumes rather than better outcomes — meaning the value score spiked because fewer policies paid premiums into the pool.
Add-on product performance is likely to draw regulatory scrutiny as Consumer Duty shifts the burden onto insurers to prove policies deliver value.
“Insurers can no longer rely on volume sales of optional extras,” says Troy. “They must now demonstrate that add-ons deliver genuine benefits and not just additional revenue streams.”
Home insurance sees improvement, but inflation still a challenge
Home insurance premiums fell by 9.7% year-on-year in July 2025, but costs remain more than 23% higher than mid-2023 levels. Claims acceptance for home insurance dropped to 71%, and 11% of customers made a complaint. Rising repair and materials costs continue to put pressure on claims settlements.
Despite lowering premiums, some consumers are still struggling to secure affordable cover. Increasingly, drivers and homeowners look to comparison platforms to find cheaper car insurance and review policy structure — particularly what’s included versus sold as an add-on.
Consumer Duty raises expectations for transparency and value
The FCA’s Consumer Duty regulations require insurers to ensure products offer fair value and meet customer needs. Insurance DataLab’s analysis shows that while core motor insurance meets expectations, some add-ons do not.
Insurers offering personal accident or legal expenses add-ons may face further regulatory pressure if poor value persists.
As consumers re-evaluate policies during renewal season, more are shifting focus from headline price to car insurance savings through better value products, excess options, black box technology or improved cover rather than add-ons.
Andrea Troy concludes: “This data shows that the cost of a policy doesn’t always match the value. Drivers should check what they’re paying for, compare cover levels and actively challenge unnecessary add-ons.”
