Before the conclusion of a non-investment insurance contract, or at any other time, an insurance intermediary that conducts insurance mediation activities for a commercial customer must, if that commercial customer asks, promptly disclose the commission that he and any associate of his receives in connection with the non-investment insurance contract in question, in cash terms or, to the extent it cannot be indicated in cash terms, the basis for the calculation of the commission, in a durable medium.1
ICOB 4.6.1 R does not replace the general law on the fiduciary obligations of an agent. In relation to contracts of insurance the essence of these obligations is generally a duty on the agent to account to his principal. However, in certain circumstances, the duty is one only of disclosure. Where a customer employs an insurance intermediary by way of business and does not remunerate him, and where it is usual for the insurance intermediary to be remunerated by way of commission paid by the insurer out of premium payable by the customer, then if the customer asks what the insurance intermediary's remuneration is, the insurance intermediary must tell him. ICOB 4.6.1 R is additional to this requirement in that it applies whether or not the insurance intermediary is an agent of the commercial customer.
1In considering any disclosure of commission under ICOB 4.6.1 R, an insurance intermediary should include all forms of remuneration from any arrangements he may have for remuneration in connection with the non-investment insurance contract (including arrangements for sharing profits, for payments relating to the volume of sales, and for payments from premium finance companies in connection with arranging finance for a non-investment insurance contract).
1An example of a situation where the commission could not be stated in cash terms under ICOB 4.6.1 R is where the insurance intermediary is remunerated under a profit share arrangement or any other similar arrangement under which the insurance intermediary may receive a non-fixed amount not specific to any particular non-investment insurance contract. The commission, to the extent it cannot be indicated in cash terms, should instead be indicated by showing the basis of its calculation.