Chapter 3 Flashcards
ICOBS applies to…
Sales and administration process of general insurance.
Where there is a chain of brokers, the rules apply to the broker who….
Is in direct contact with the customer i.e the producing broker
If it is unclear whether a customer is a consumer/commercial consumer the customer is treated as…
A consumer to receive the highest level of protection.
When a customer is acting in a private capacity and a commercial capacity then they are treated as a…
Commercial customer
What is a suitability statement?
A statement of demands and needs and reasons given for any advice
General insurance contracts are subject to…cancellation rights
14 days cancellation rights
Under ICOBS 8 claims must…
1) Handled promptly and fairly
2) Provide guidance to help a policy holder make a claim
3) Appropriate information to the progress
4) Not unreasonably reject a claim
5) Settle claims promptly once settlement terms are agreed.
ICOBS does not apply to
reinsurance or large risks contracts
Firms can elect to handle pure protection under ICOBS if they….
Are primarily engaged in other general insurance
In a group policy brokers must…
Provide information to their customer to pass to other policyholders
A policyholder =
Anyone entitled to make a claim under the policy or direct to the insurer
A customer =
A policy holder who arranges the policy
Any communications should be…
Clear fair and not misleading - Control of misleading advertisement regulations 1988
A firm must not offer, give or accept inducements if….
1) They are likely to conflict with duties owed to a customer
2) Will lead to their customers being unfairly treated.
It would be prudent IRO record keeping to evidence
1) The reasons for any personal recommendation
2) What documentation was provided to the customer
3) How claims have been settled and why
A broker must not…..
Restrict / exclude or rely on any exclusions or restrictions of any duty or liability it may have to a customer UNLESS it is reasonable to do so and the duty or liability arises other than under the regulatory system
Once a contract is concluded / renewed / mid term adjustments, brokers must provide info including…
1) Name
2) Address
3`) Confirmation of authorisation
4) Ownership
A broker must detail a scope of service which includes:
What they are going to do for the client
Whether the broker is giving a personal recommendation.
Information must be provided to the client…
1) in a durable medium
2) In a clear and consistent manor
3) In the language of the state of the risk or any agreed parties
4) Free of charge
What do the additional rules for PPI aim to do
Make sure customers can make an informed choice.
What points are key in deciding if a policy meets a customers demands and needs…
1) Significant benefits of a policy
2) Exclusions and limitations of the policy
3) Duration and price info
Brokers must provide a customer with details of the amount of any fees payable during the duration of the contract including fees for…
1) Insurance mediation
2) Fees mid term adjustments = consumer
For a commercial customer a broker must…
On request, promptly disclose commission.
Any information that is to be provided by the firm can be consolidated through…
Initial disclosure documentation.
A broker should Take reasonable steps to ensure a customer only buys
a policy that they can claim from
A broker should also be mindful On the restrictions on rejecting claims for….
non disclosure.
Customers should be aware as to what should be Disclosed depending on whether they are a….
customer or consumer.
Before providing recommendations the broker must…
Establish the clients requirements;
- Known as the demands and needs
- Must take into account for the information the client discloses
For non advised sales the statement of demands and needs is…
Flexible and involves giving a customer a record of the demands and needs discussed.
For advised sales the broker must take reasonable care to…
ensure the suitability of its advice for any customer who is entitled to rely on its judgement
For advised sales the broker must take in the following info…
1) Whether the level of cover is sufficent
2) Cost of the contract
3) The relevance of any exclusions, excesses, limits or conditions
Brokers must base their recommendations on..
What the client tells them and give a fair analysis of the market = Review a sufficiently large number of insurance contracts.
Brokers must take reasonable steps to ensure a customer is given appropriate information in…
1) In good time
2) In a comprehensible form so that the customer can make an informed decision.
The broker taking these reasonable steps allows the customer to….
1) Consider terms in a sufficient time
2) Seek alternative options if they are not happy.
FCA’s new rules for transparency include…
1) Disclose last years premium on renewal notices
2) Advise the customer to shop around
3) Identify the consumers who have renewed with them for four consecutive times to encourage them to seek better deals.
A firm should provide evidence of cover promptly after inception which means…
7 working days for consumers and 30 days for commercial customers
What information should be provided to a customer before the conclusion of a contract
1) The law applicable
2) The arrangements for handling policyholders complaints
3) The address of the head office or the branch of the insurer
4) Cancellation rights and details.
An insurance product and information document must be provided to new and existing customers at renewal and must be…
1) Jargon free
2) Provide objective and relevant info
3) Comprehensible form
The FCA requires firms to produce product info that is…
Clear and easy for the customers to understand and is honest and fair about the limitations
What are the cancellation rights days?
14 days for general insurance and 30 days for pure protection and PPI
If cancelled within given time frame the insurer must..
Give the insured a full refund in 30 days.
IRO claims handling, brokers should be aware of
The duties on insurers and make sure they do not delay or impede these duties
If the brokers have a claims handling authority brokers must…
Comply with the requirements on behalf on the insurers.
