Insurer Due Diligence: What “Good” Looks Like for Brokers in 2026

Introduction

If there’s one topic the FCA keeps circling back to, it’s insurer due diligence. It’s not glamorous, it’s not exciting, and it’s definitely not the part of broking anyone brags about at conferences. But in 2026, it has become one of the clearest indicators of whether a broker is genuinely acting in the client’s best interests — and the FCA is paying close attention.

And here’s why this matters so much right now.

Why This Topic Matters to Business Insurance Brokers

Insurer due diligence has become one of the FCA’s biggest focus areas for intermediaries, and it’s directly shaping how brokers are expected to operate in 2026. The regulator wants brokers to show not just what they recommended, but why — and that means being able to evidence insurer selection, financial strength checks, claims performance reviews, and clear communication with clients. With unrated carriers, MGAs, and shifting market appetites all playing a bigger role in commercial placements, brokers need to demonstrate that every insurer choice is thoughtful, transparent, and in the client’s best interests. Strong due diligence isn’t just compliance anymore — it’s a core part of professional broking.

So let’s break down what “good” looks like this year — in a way that feels practical, not painful.

Start with the basics: know who you’re placing with

It sounds obvious, but the FCA has repeatedly found cases where brokers couldn’t clearly explain who the actual insurer was behind an MGA, or why they’d chosen a particular carrier. In 2026, that’s simply not acceptable.

A strong due diligence process starts with three core checks:

1. Financial strength: This means more than glancing at a solvency ratio. It’s about understanding the insurer’s capital position, risk profile, and any emerging concerns. SFCRs are long, but the key sections — capital coverage, risk exposures, and auditor commentary — tell you a lot. If something looks unusual, you need to be able to explain it.

2. Claims performance: The FCA and FOS publish complaints data for a reason. If an insurer has a pattern of slow settlements, high dispute rates, or recurring themes in complaints, that’s a red flag. Claims experience is a huge part of fair value, and brokers are expected to factor it in — not just at renewal, but throughout the year.

3. Regulatory status: This is especially important for overseas insurers or those outside FOS jurisdiction. If a client won’t have access to FOS, they need to know — and you need to show you’ve explained it. This is one of the FCA’s biggest “transparency” expectations.

These checks aren’t about creating more admin. They’re about protecting your clients and your firm.

Unrated carriers: not forbidden, but higher scrutiny

Unrated insurers aren’t automatically a problem. Some are well‑run, well‑capitalised, and perfectly suitable for certain risks. But they do require more scrutiny — and more explanation.

 A good due diligence file for an unrated carrier should include:

• A clear summary of their financial position

• Their reinsurance structure and key partners

• Independent assessments (e.g., Litmus Test results)

• Their track record in the UK market

• Why they are appropriate for this client and this risk

The FCA doesn’t ban unrated carriers. They just expect brokers to show they’ve done the thinking and communicated the risks clearly. If you can demonstrate that the insurer is suitable and the client understands the position, you’re on solid ground.

Document your rationale like someone else will read it

This is where many brokers fall short. They do the checks, but the file doesn’t show the thinking. If it’s not written down, the FCA assumes it didn’t happen.

A strong file should include:

• The insurers considered

• Why some were discounted

• Why the chosen insurer was the best fit

• Any risks or limitations explained to the client

• Evidence that the client understood the decision

This doesn’t need to be a novel. A few clear paragraphs can make the difference between a compliant file and a vulnerable one. Think of it as future‑proofing your advice.

Explain insurer choice to clients in plain English

Clients don’t need a lecture on solvency ratios, but they do need to understand why you’ve recommended a particular insurer. The FCA wants transparency, not technical overload.

 A good explanation covers:

• Who the insurer actually is

• Why they’re suitable for the client’s needs

• Any limitations or considerations

• How they compare to alternatives

This builds trust and protects you if things go wrong later. It also reinforces your value as an adviser, not just a distributor.

Avoid the “we’ve always used them” trap

This is the FCA’s biggest red flag. Habit is not a rationale. Familiarity is not due diligence. And long‑standing relationships don’t replace evidence.

If you’ve used an insurer for years, great — but you still need to show:

• You’ve reviewed their current financial position

• You’ve checked their claims performance

• You’ve considered alternatives

• You’ve matched them to the client’s needs today, not five years ago

Consistency is fine. Complacency is hard to explain away!

In Summary

Good due diligence isn’t about creating more paperwork. It’s about protecting clients, protecting your firm, and proving that your advice is grounded in real, thoughtful assessment. In 2026, the brokers who get this right won’t just satisfy the FCA — they’ll stand out as trusted advisers in a market where clients need clarity more than ever.

The Thread…

Insurance Support Solutions Ltd can provide specialist support to understand updates or changes to regulations, to build strong client relationships, to save you time & expense, to respond & communicate whilst also using the output to continuously improve your customer experience, your team, and your business.

Ask us about what is involved, and we will work with you to provide a bespoke solution that gives you confidence and conviction to positively impact on the customer experience.

And Finally…

The compliance team asked for evidence of due diligence.

The broker sent a screenshot of an email that said: “Can you confirm this is correct?”