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  3. Point in time
    2019-08-01

ICOBS 5.2 Demands and needs

Application: who? what?

ICOBS 5.2.1 R RP

This section applies to an insurance distributor when carrying on insurance distribution activities.2

Demands and needs

ICOBS 5.2.2 R RP
  1. (1)

    Prior to the conclusion of a contract of insurance2 a firm must specify,2 on the basis of information obtained from2 the customer, the demands and the needs of that customer2.

  2. (2)

    The details must be modulated according to the complexity of the contract of insurance2 proposed and the type of customer.2

  3. (3)

    2A statement of the demands and needs must be communicated to the customer prior to the conclusion of a contract of insurance.

[Note: articles 20(1) and 20(2) of the IDD2]

ICOBS 5.2.2A G

2A firm may obtain information from the customer in a number of ways including, for example, by asking the customer questions in person or by way of a questionnaire prior to any contract of insurance being proposed.

ICOBS 5.2.2B R

2When proposing a contract of insurance a firm must ensure it is consistent with the customer’s insurance demands and needs.

[Note: recital 44 to, and article 20(1) of, the IDD]

ICOBS 5.2.2C G

2 ICOBS 5.2.2BR applies whether or not advice is given and in the same way regardless of whether that contract is sold on its own, in connection with another contract of insurance, or in connection with other goods or services.

ICOBS 5.2.2D R

2The sale of a contract of insurance must always be accompanied by a demands and needs test on the basis of information obtained from the customer.

[Note: recital 44 to, and article 20(1) of, the IDD]

ICOBS 5.2.3 R RP

[deleted] 2

Format of the statement of demands and needs: non-advised sales

ICOBS 5.2.4 G RP

Once the firm has obtained information from the customer and ensured the contract of insurance is consistent with the demands and needs, the2 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, for whose demands and needs the contract is consistent2. 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"; and2

  3. (3)

    giving a customer a record of all his demands and needs that have been discussed2

  4. 2

Means of communication to customers

ICOBS 5.2.5 R

2The information to be provided to customers in ICOBS 5.2 must be given in accordance with ICOBS 4.1A (Means of communication to customers).

[Note: article 23(1) of the IDD]