Insurance Guide

The rules and guidelines on Insurance Regulation can be found in the Insurance Conduct of Business sourcebook. Below we have detailed some of the key points regarding insurance regulation.

Extent of The Regulation

What is covered by the insurance regulations?

The insurance regulations are applicable to anybody who is involved in the sale and administration of general insurance and pure protection contracts.

Can I have some examples of what 'general insurance' and 'pure protection' mean?

A general insurance contract would include plans such as motor insurance, buildings and contents insurance and ASU cover. Pure protection would encompass plans such as income protection insurance and term cover.

Are there any 'insurance' contracts that are not covered by the regulation?

There are a few that are not covered. For example, re-insurance contracts do not fall under the scope of regulation. In addition Long Term Care plans are regulated but not under the insurance rules; instead they are regulated under the FSA’s investment business rules.

Documentation Requirements

How do I have to evidence the suitability of my advice?

The FSA rules state that for all sales a 'Demands and Needs Statement' must be provided to the customer. This statement needs to outline the customer’s personal circumstances and explain how a recommendation meets the needs of the customer.

Do I need to produce 'Demands and Needs Statements' for commercial clients?

Although insurers can in certain circumstances not provide statements to commercial clients, this is not an option for intermediaries. Therefore a ‘Demands and Needs Statement’ must be produced for all personal and commercial customers.

Are there any template 'Demands and Needs Statements' that I can use?

No. The FSA have provided some example statements but have not provided any templates. The reason for this is that they believe each customer will have unique personal circumstances and therefore by definition each statement will need to be tailored for those unique circumstances.

Do I need to provide an IDD the same as I do for mortgages?

As soon as you make contact with a client you will need to provide them with an Initial Disclosure Document (IDD). This is a document that describes some basic details of the firm and its relationship with a client. There are prescribed pieces of information that must be included in the document, such as your firm's name and status, the services that it offers and the cost of these services. If you are conducting both Mortgage and Insurance business with a client then you can use a Combined Initial Disclosure Document (CIDD), although this is not compulsory.

Information to customers

Do I have to disclose the commission that I receive to my clients?

There is no requirement to disclose commission that you have received to either retail or commercial clients. However, if the client requests this information then you are obliged to provide it.

Does my client have a right to cancel their policy?

Anybody who takes out a general insurance contract will have 14 days in which they can cancel it. For pure protection contracts the period is slightly longer at 30 days.

If I am recommending a group policy to a commercial client do I still need to provide information to all employees?

Not directly. You will need to provide the relevant documentation to the employer and advise them to provide a copy of the policy summary to the employees and also make them aware that a copy of the policy document is available on request.

Further information

Where can I look if I want more information?

The detailed rules can be found in the Insurance Conduct of Business (ICOB) sourcebook. This can be viewed by following this link.

Below is a table of contents for ICOB that you may find helpful.

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