Part

ICOBS Insurance: Conduct of Business sourcebook

Chapter

Identifying client needs and advising

Printed on: 05/07/2024

Rulebook at: 31/03/2013

ICOBS 5

Identifying client needs and advising

ICOBS 5.1

General

  • 06/01/2008

Eligibility to claim benefits: general insurance contracts and pure protection contracts

Eligibility to claim benefits: payment protection contracts

Disclosure of material facts

ICOBS 5.1.4

handbook-guidance

A firm should bear in mind the restriction on rejecting claims for non-disclosure (). Ways of ensuring a customer knows what he must disclose include:

  1. (1) explaining the duty to disclose all circumstances material to a policy, what needs to be disclosed, and the consequences of any failure to make such a disclosure; or
  2. (2) ensuring that the customer is asked clear questions about any matter material to the insurance undertaking.
  • 06/01/2008

ICOBS 5.2

Statement of demands and needs

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Application: who? what?

ICOBS 5.2.1

handbook-rule

This section applies to:

  1. (1) an insurance intermediary in relation to any policy (other than a connected travel insurance contract); and
  2. (2) an insurer when it has given a personal recommendation to a consumer on a payment protection contract or a pure protection contract.
  • 01/01/2009

Statement of demands and needs

ICOBS 5.2.2

handbook-rule
  1. (1) Prior to the conclusion of a contract, a firm must specify, in particular on the basis of information provided by the customer, the demands and the needs of that customer as well as the underlying reasons for any advice given to the customer on that policy.
  2. (2) The details must be modulated according to the complexity of the policy proposed.

[Note: article 12(3) of the Insurance Mediation Directive]

  • 06/01/2008

Means of communication to customers

ICOBS 5.2.3

handbook-rule
  1. (1) A statement of demands and needs must be communicated:
    1. (a) on paper or on any other durable medium available and accessible to the customer;
    2. (b) in a clear and accurate manner, comprehensible to the customer; and
    3. (c) in an official language of the State of the commitment or in any other language agreed by the parties.
  2. (2) The information may be provided orally where the customer requests it, or where immediate cover is necessary.
  3. (3) In the case of telephone selling, the information may be given in accordance with the distance marketing disclosure rules (see ICOBS 3.1.14 R).
  4. (4) If the information is provided orally, it must be provided to the customer in accordance with (1) immediately after the conclusion of the contract of insurance.

[Note: article 13 of the Insurance Mediation Directive]

  • 06/01/2008

Statement of demands and needs: non-advised sales

ICOBS 5.2.4

handbook-guidance

The format of a statement of demands and needs is flexible. Examples of approaches that may be appropriate where a personal recommendation has not been given include:

  1. (1) providing a demands and needs statement as part of an application form, so that the demands and needs statement is made dependent upon the customer providing personal information on the application form. For instance, the application form might include a statement along the lines of: "If you answer 'yes' to questions a, b and c your demands and needs are those of a pet owner who wishes and needs to ensure that the veterinary needs of your pet are met now and in the future";
  2. (2) producing a demands and needs statement in product documentation that will be appropriate for anyone wishing to buy the product. For example, "This product meets the demands and needs of those who wish to ensure that the veterinary needs of their pet are met now and in the future";
  3. (3) giving a customer a record of all his demands and needs that have been discussed; and
  4. (4) providing a key features document.
  • 06/01/2008

ICOBS 5.3

Advised sales

  • 06/01/2008

Suitability

ICOBS 5.3.1

handbook-rule
A firm must take reasonable care to ensure the suitability of its advice for any customer who is entitled to rely upon its judgment.
  • 06/01/2008

Suitability guidance for protection policies

Advice on the basis of a fair analysis

ICOBS 5.3.3

handbook-rule

If an insurance intermediary informs a customer that it gives advice on the basis of a fair analysis, it must give that advice on the basis of an analysis of a sufficiently large number of contracts of insurance available on the market to enable it to make a recommendation, in accordance with professional criteria, regarding which contract of insurance would be adequate to meet the customer's needs.

[Note: article 12(2) of the Insurance Mediation Directive]

  • 06/01/2008