The Financial Conduct Authority has called on insurers and advisers for views on how to help close the protection gap.
The call for views follows the release of the regulator’s interim findings of its competition review of pure protection products.
The report found that 58% of adults do not hold a pure protection product.
The regulator’s research suggests that the gap exists because consumers aren't aware of their needs and aren't prompted to consider them. Other issues include ability to pay, misunderstandings about the product or improvements needed in the sales process.
Graeme Reynolds, director of competition and interim director of insurance at the FCA, said: “These insurance products play a vital role in helping families manage some of the most difficult experiences in life. While competition in the market is mostly working well for consumers, many more people could benefit from protection.”
The regulator is looking at what can be done to encourage more consumers to turn to pure protection products.
The interim report found that for those who have taken out protection insurance , the market mostly works well. There are a wide range of products, most consumers can claim when they need to, and the costs of cover have remained stable in the last few years.
The regulator has called for feedback by 31 March, with a final report to be published in the third quarter of 2026.
Tony Mudd, third party products and services director at St James's Place, said he supports the focus from the FCA on closing the protection advice gap.
He said: "The FCA’s emphasis on collaboration to address the UK’s long-standing “protection gap” is a positive step. Closing this gap will require coordinated action across the industry rather than quick fixes, and we fully support the FCA’s intention to work with firms to develop solutions that improve consumer understanding, access and long-term outcomes."