The challenge was issued in its ‘Call for Input (CfI) on Access to Insurance’, which was published today.
The regulator said it was concerned that consumers “find it difficult to access the specialist travel insurance market.”
The FCA has vowed to work with “key industry stakeholders” to create a new service which will redirect customers to specialist providers.
Last June the watchdog issued its ‘Call for Input’ to gather more evidence and decide how best to address concerns about people with pre-existing medical conditions obtaining affordable travel insurance.
In the UK at least 15m people are currently living with at least one long-term health condition.
This number is predicted to rise to 18m over the next decade.
The consultation provided a number of recurring themes, some of which were:
• A dearth of quality information on alternative options for consumers after they had received a high quote or had been refused cover, which can cause consumers to assume that they are uninsurable.
• Inadequate understanding among consumers and firms around insurance terms and the risk factors that are considered by providers when calculating the premium.
• A lack of transparency around pricing, the risk factors which drive quotes and how premiums are calculated which limits consumer awareness about their options and can mean that they have difficulty finding competitive insurance that is appropriate for their medical condition.
Christopher Woolard, executive director of strategy and competition at the FCA, said: “People with pre-existing medical conditions feel poorly served by travel insurance.
“There are specialist services out there, but often people don’t know where to find them.
“We’ll work with industry to point people in the right direction and help dispel some of the myths and misunderstandings to ensure this market works better.
“This will also form part of our continuing work on insurance pricing practices which are designed to lead to long-term positive changes across the market.”
The findings of the CfI will also be used to inform the FCA’s wider work on insurance pricing practices.
Head of Conduct Regulation at the Association of British Insurers (ABI), Raluca Boroianu-Omura, said: “Travel insurers aim to provide protection to as many people as possible and, as the FCA has recognised, cover is widely available for people with a range of long-term and serious health conditions.
"There are specialist insurers and brokers who can help people with health conditions access appropriate insurance, and we’ve previously worked alongside charities such as Macmillan to help provide practical advice for consumers.
"We’re always open to considering other ways of helping people understand and find the right cover for them and will continue to work with the FCA, other industry and consumer bodies, following today’s proposals.
“The main purpose of travel insurance is to cover the cost of emergency medical treatment overseas, with insurers paying out medical claims worth around £200 million a year. This means a person’s medical history is particularly relevant when they are buying cover.”