ICOB 5.4 Provision of information to commercial customers
Before the conclusion of the contract
Before the conclusion of a non-investment insurance contract, an insurance intermediary must provide a commercial customer with:
- (1)
sufficient information to enable the commercial customer to make an informed decision about the contract being proposed;
- (2)
the directive-required information in ICOB 5.5.20 R(1) to (3) or ICOB 5.5.20 R(4) to (15) in writing (subject to ICOB 5.5.17 G to ICOB 5.5.19 R), unless the contract is being concluded by telephone; and
- (3)
the premium and any fees relating to the non-investment insurance contract.
Where a non-investment insurance contract with a commercial customer is concluded by telephone, ICOB 5.4.1 R (2) does not apply. The insurance intermediary must comply with ICOB 5.4.1 R(1) and (3) before conclusion of the contract and provide the information in ICOB 5.4.1 R (2) immediately after conclusion of the contract in accordance with ICOB 5.4.4 R.
- (1)
The information in ICOB 5.4.1 R(1) that an insurance intermediary provides may vary according to the commercial customer's knowledge, experience and ability.
- (2)
In deciding what information is sufficient, the insurance intermediary should take account of the main benefits, exclusions, limitations and conditions of a policy.
On conclusion of the contract
If the information referred to in ICOB 5.4.1 R(2) and (3) was not provided in writing before the non-investment insurance contract was concluded, it must be provided in writing immediately afterwards.
An insurance intermediary must provide a commercial customer with a policy document promptly after the conclusion of the non-investment insurance contract.
- (1)
In considering how to comply with the requirement to be prompt in ICOB 5.4.5 R, the insurance intermediary should take account of the complexity of the contract and the needs and expectations of the commercial customer
- (2)
Where insurance cover commences before the full terms and conditions have been agreed, the policy document should be provided to the commercial customer promptly after the terms and conditions have been finalised.
As stated in ICOB 1.2.8 R, ICOB 5.4.5 R applies to contracts with commercial customers that are contracts of large risks where the risk is located within the European Economic Area as well as other non-investment insurance contracts.
Group policies sold to commercial customers
When an insurance intermediary sells a group policy to a commercial customer the terms of which provide for persons, other than the commercial customer who concludes the non-investment insurance contract, to become policyholders, the insurance intermediary must, promptly after the conclusion of the contract:
- (1)
provide a policy document and a policy summary containing the information in ICOB 5.5.5 R except ICOB 5.5.5 R(6) (cross-references to the policy document) to the commercial customer (but a policy summary need not be supplied if there is no policyholder who would bea retail customer);1
- (2)
inform the commercial customer that he should:1
2- (a)
where a policy summary is supplied,2provide the policy summary containing the information in (1) to each policyholder who is capable of being a retail customer; and1
- (b)
inform each policyholder that a copy of the policy document is available on request; and1
- (a)
- (3)
where a policy summary is provided, if the policy replaces a previous group policy, inform the commercial customer that he should inform each policyholder who is capable of being a retail customer of any changes to the information in the policy summary.1
- (1)
The policyholder referred to in ICOB 5.4.8 R is a person who has rights under the policy to make a claim on the insurance undertaking of the policy (as distinct from a person who can only make a claim on, for example, his employer or on trustees in respect of the policy) (see ICOB 1.2.15 R and ICOB 1.2.16 G). Such a policyholder will typically be a retail customer under ICOB. Examples of types of group policies that may fall within the scope of ICOB 5.4.8 R are a group health policy for employees or a personal accident policy for an affinity group such as a sports club or trades union.
- (2)
The policy summary information to be provided to policyholders in accordance with ICOB 5.4.8 R(2) can be provided in any form, for example, on an employer's intranet, in a staff handbook or in a separate booklet, providing it is in writing.
Renewal
Where a commercial customer's non-investment insurance contract is due for renewal, ICOB 5.4.11 R to ICOB 5.4.14 R apply instead of ICOB 5.4.1 R to ICOB 5.4.7 G.
Unless the insurance intermediary has reason to believe that the commercial customer does not wish to renew the policy or the insurance intermediary has notified the commercial customer that it will not act for him on renewal,the insurance intermediary must, in good time before the expiry of the policy:
- (1)
provide renewal terms to the commercial customer; or
- (2)
notify the commercial customer that the insurance undertaking is not willing to invite renewal of the policy or that the insurance intermediary no longer deals with the insurance undertaking.
ICOB 5.4.11 R(2) includes circumstances where the insurance undertaking is not willing to invite renewal through the insurance intermediary in contact with the commercial customer.
A commercial customer may consent not to receive the information in ICOB 5.4.11 R if the insurance intermediary has explained to the commercial customer the consequences of giving that consent before it is given.
ICOB 5.4.11 R and ICOB 5.4.13 R do not apply to renewal of a non-investment insurance contract of no more than one month's duration whose terms provide for automatic renewal and for cancellation at the commercial customer's option. Instead, the commercial customer must be notified of changes to the terms and conditions of the contract, including the premium, before the changes take effect.
Mid-term changes
For the duration of a non-investment insurance contract that is a pure protection contract an insurance intermediary must notify a commercial customer of any changes to the information in ICOB 5.5.20 R(22) (subject to ICOB 5.5.19 R) and should take reasonable steps to do so in good time before the change takes effect.