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GIGI 3.1 Introduction

What does ICOB cover?

GIGI 3.1.1G

This chapter provides a guide to the rules in the Insurance: Conduct of Business sourcebook (ICOB). These rules govern a firm's relationship with its customers before, during and after the sale of a non-investment insurance contract. They aim to ensure that firms treat customers fairly.

GIGI 3.1.2G

The table below summarises the content of each chapter of ICOB. Not all of ICOB will be relevant to you and not all the content of any given chapter will be relevant - it will depend on the business you do. For example, some of our rules will apply only when you deal with a retail customer and others will apply only when you deal with a commercial customer. Some rules apply to insurance companies in their capacity as product providers and these are generally not covered in this Guide. At the beginning of each chapter of ICOB you will find a section titled 'Application'. This will tell you if all or part of that chapter applies to you.

GIGI 3.1.3G

This Guide does not cover the rules on distance non-investment mediation contracts in ICOB 8 as we think these contracts rarely exist. You should check the guidance at ICOB 1.7.3 G (4) to see if you provide distance non-investment mediation contracts.

GIGI 3.1.4G

Summary of the content of ICOB



Does it apply to you?

What does it include?


Application and purpose


•Sets out the scope of ICOB, including to which firms the rules apply, to what activities and where the rules apply

•A summary of which parts of the ICOB rules apply to firms

•Guidance on the application of other parts of the Handbook


General rules including unfair inducements


•General requirements that apply throughout ICOB

•Communications to customers must be clear, fair and not misleading

•Rules on inducements

•Prohibition on excessive charges for retail customers


Financial promotion


•Requirement for financial promotions to be clear, fair and not misleading

•Rules on comparative advertising

•Rules on the approval of promotions


Advising and selling standards


•Information on the status of the firm

•Suitability of advice

•Provision of a demands and needs statement

•Provision of commission information for commercial customers

•Restrictions on unsolicited services (including tacit renewals)


Product disclosure

Yes - partially

•Responsibilities of insurance companies and intermediaries

•Content of product information and when it must be provided



No - although the rules will be of interest to insurance intermediaries (see paragraph 3.5.2)

•Cancellation rights for retail customers in relation to non-investment insurance contracts


Claims handling

Yes - partially

•Obligations on insurance companies

•Obligations on intermediaries to act with due care, skill and diligence and to avoid conflicts of interest


Distance non-investment mediation contracts

Yes - if you arrange these contracts

•Information to be given to customers

•Restrictions on unsolicited services (including tacit renewals)

•Cancellation requirements

What activities does ICOB apply to?

GIGI 3.1.5G

ICOB applies only to intermediaries who sell and administer 'non-investment insurance contracts' or who communicate and approve 'non-investment financial promotions'. The terms 'non-investment insurance contract' and 'non-investment financial promotion' have a special meaning in the rules - see Appendix A. The defined term 'insurance intermediary' (see Appendix A) includes an insurance company when selling directly. However, as we explained in Chapter 1, this Guide is not designed for insurance companies and does not cover all the rules that apply to them. Where there is a chain of intermediaries between the insurance company and the customer, ICOB applies only to the intermediary in contact with the customer (ICOB 1.2.3 R (2)).

Which customers does ICOB apply to?

GIGI 3.1.6G

ICOB uses the defined terms 'retail customer' and 'commercial customer' (these terms have a special meaning in the rules - see Appendix A for details). 'Customer' means the customer taking out a policy and not other 'policyholders' (see 3.1.8 below for an explanation of policyholder), so disclosures required under ICOB only need to be made to that person unless otherwise stated. The only chapters that apply more widely are Chapter 2 (General rules including unfair inducements) and Chapter 7 (Claims handling).

GIGI 3.1.7G

If it is not clear whether your customer is a retail or commercial one, he should be treated as a retail customer (ICOB 1.2.6 R). Guidance on when a customer is a retail customer or a commercial customer is given in ICOB 1.7.3 G (1). Where a customer who is an individual buys a policy that covers him in both a private capacity and for his business, he must be treated as a retail customer (ICOB 1.2.6A R). For example, a driving instructor taking out motor insurance to cover both his business and private use of the vehicle should be treated as a retail customer.

How does ICOB apply to group policies?

GIGI 3.1.8G

ICOB contains separate provisions for 'group policies' (see ICOB 1.2.15 R and ICOB 1.2.16 G), which are defined as non-investment insurance contracts that someone (either a commercial or a retail customer) enters into as legal holder of the policy on his own behalf and for other persons who are, or will become, policyholders (group policy is a defined term - see the Handbook Glossary for the full definition). A policyholder includes anyone who is entitled to make a claim directly to the insurance company (ICOB 1.2.16 G (2)). ICOB applies in full in respect of the legal holder of the policy, but only the following requirements must be met by intermediaries as regards the other persons who are, or will become, policyholders under a group policy:

  1. (1)

    if one of these persons receives a personal recommendation from an intermediary about joining a group scheme, the intermediary must ensure that the recommendation is suitable and give the person a demands and needs statement (see paragraphs 3.3.18 to 3.3.25 of this Guide); and

  2. (2)

    a commercial or retail customer who is the legal holder of the policy must be given product information to pass on to the other persons (see ICOB 5.4.8 R to ICOB 5.4.9 G - commercial customers, and ICOB 5.3.29 R to ICOB 5.3.30 G - retail customers).

General requirements

GIGI 3.1.9G

There are several general rules that apply in ICOB (set out in ICOB 2) covering:

  1. (1)

    clear, fair and not misleading communication (ICOB 2.2.3 R);

  2. (2)

    unfair inducements (ICOB 2.3);

  3. (3)

    when you can rely on information provided to you by another person (ICOB 2.4);

  4. (4)

    preventing you from avoiding or limiting any duty or liability you have to a customer under the regulatory system (ICOB 2.5);

  5. (5)

    general requirements related to distance contracts (ICOB 2.7);

  6. (6)

    general requirements on record keeping (ICOB 2.8);

  7. (7)

    general provision allowing information to be sent only to the first-named customer where a contract is effected jointly (ICOB 2.9); and

  8. (8)

    general provision that an insurance intermediary must ensure its charges to a retail customer are not excessive (ICOB 2.10).

Key Facts logo

GIGI 3.1.10G

We developed the key facts logo following consumer research to highlight key information that customers should read. The ICOB rules say that it can be used on the initial disclosure document (IDD) and that it must be used on the combined initial disclosure document (CIDD) and policy summary (see paragraphs 3.3.7 to 3.3.11 and 3.4.19 - 3.4.20 respectively). You will find the logo on our website at: facts_logo. We also require the logo to be used on certain documents required by our rules in the investment and mortgage markets. The ICOB rules also prevent firms using the key facts logo on other documents (ICOB 2.2.2 R and ICOB 3.8.1 R (3)).

What do the rules say on excessive charges and when do they apply?

GIGI 3.1.11G

You need to ensure that your charges to retail customers for insurance mediation services are not excessive (see ICOB 2.10). In determining whether or not your charges are excessive you should consider:

  1. (1)

    the level of your charges compared to charges for similar services or products in the market;

  2. (2)

    the degree to which the charges are an abuse of the trust put in you by your retail customer; and

  3. (3)

    the nature and extent of information provided to your customer on charges.