ICOB 7.4 Duties of insurance intermediaries

ICOB 7.4 will usually apply to an insurance intermediary that is not an insurer, but it may also apply to an insurer, for example, if it were dealing with a claim on a policy insured by another insurance undertaking.

The rules and guidance in ICOB 7.4 do not seek to set out the full extent of the duties owed by the insurance intermediary to any person for whom it acts, nor do they displace the general law on the duties of an insurance intermediary.

ICOB 7.4.5 R imposes a requirement on an insurance intermediary to avoid conflicts of interest in relation to claims where it acts on behalf of a customer, unless it can manage them by disclosure to, and the obtaining of consent from, its customer.

An insurance intermediary should consider whether it is possible to manage the conflict by disclosing the conflict to the customer and obtaining his consent. Where an insurance intermediary acts for a customer in arranging a policy, it is likely to be the agent for that1 customer and any other customers who are policyholders under that policy1 in connection with the preparation and handling of any claim against the insurance undertaking. If the insurance intermediary intends to be the agent of an insurance undertaking in relation to claims under that policy, it will need to consider whether it is at risk of putting itself in the position where it cannot act without some breach of duty either to the insurance undertaking or the customer making the claim1. The insurance intermediary should consider whether disclosure and consent are sufficient to reconcile the conflicting obligations. An example of a circumstance in which disclosure and consent are unlikely to be sufficient, and when an insurance intermediary may well consider that it should not act for the insurance undertaking or the customer (or both), is where the insurance intermediary knows that its customer will, to obtain a quick payment, accept a low amount in settlement of a claim and also knows the insurance undertaking is willing to settle for a higher amount.

ICOB 7.4.8 R would apply, for example, where an insurance intermediary has delegated authority for claims handling and deals with a claim in relation to a contract that it sold to a customer, if the insurance intermediary is not acting on behalf of that customer in relation to the claim.