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ICOB 5.3 Provision of information to retail customers

Before the conclusion of a contract which is not a distance contract

ICOB 5.3.1R

If a non-investment insurance contract is not a distance contract, an insurance intermediary must, in good time before the conclusion of the contract:

  1. (1)

    provide a retail customer with the following information in a durable medium:

    1. (a)

      a policy summary (ICOB 5.5.1 R to ICOB 5.5.13 G);

    2. (b)

      a statement of price (ICOB 5.5.14 R to ICOB 5.5.15 G);

    3. (c)

      the relevant directive-required information set out in ICOB 5.5.20 R (subject to ICOB 5.5.17 G to ICOB 5.5.19 R); and

  2. (2)

    draw the attention of the retail customer orally to the importance of reading the policy summary, and in particular the section of the policy summary on significant and unusual exclusions or limitations.

On conclusion of a contract which is not a distance contract

ICOB 5.3.2G

Where the retail customer does not have the opportunity to read the information provided in accordance with ICOB 5.3.1 R(1) before conclusion of the contract, for example, because it is provided in a sealed pack, the insurance intermediary should provide a specimen copy of all the information in such a way that the retail customer is able to read it before conclusion of the contract. For example, a stand with sealed packs could be accompanied by a copy of the policy summary and other required information, with a notice that they contain important information the retail customer should read before buying the policy. Oral disclosure at the point of sale must still be given in accordance with ICOB 5.3.1 R(2).

ICOB 5.3.3G

Guidance on what constitutes a significant or unusual exclusion or limitation is set out in ICOB 5.5.8 G to ICOB 5.5.10 G.

ICOB 5.3.4R

When a non-investment insurance contract which is not a distance contract is concluded, an insurance intermediary must provide a retail customer in a durable medium, immediately after conclusion of the contract, with:

  1. (1)

    a policy document (ICOB 5.5.27 R to ICOB 5.5.28 G);

  2. (2)

    information about the claims handling process (ICOB 5.3.9 R to ICOB 5.3.11 G);

  3. (3)

    information, where relevant, about cancellation rights (ICOB 5.3.12 R to ICOB 5.3.14 G);

  4. (4)

    for any applicable compensation scheme mentioned in the policy summary in accordance with ICOB 5.5.1 R, the extent and level of cover and how further information can be obtained, if not already included in the policy summary in accordance with ICOB 5.5.1 R(2)(b).

ICOB 5.3.5G

ICOB 5.3.4 R does not prevent an insurance intermediary providing the information in ICOB 5.3.4 R (1) to (4) before the conclusion of the non-investment insurance contract.

Before the conclusion of a distance contract

ICOB 5.3.6R
  1. (1)

    If a non-investment insurance contract is a distance contract, an insurance intermediary must provide a retail customer, in good time before the conclusion of the contract, with the following information in a durable medium, unless an exemption in (2) applies:

    1. (a)

      a policy summary (ICOB 5.5.1 R to ICOB 5.5.13 G);

    2. (b)

      a statement of price (ICOB 5.5.14 R to ICOB 5.5.15 G);

    3. (c)

      the relevant directive-required information set out in ICOB 5.5.20 R (subject to ICOB 5.5.17 G to ICOB 5.5.19 R);

    4. (d)

      the policy document (ICOB 5.5.27 R to ICOB 5.5.28 G);

    5. (e)

      information about the claims handling process (ICOB 5.3.9 R to ICOB 5.3.11 G);1

    6. (f)

      information, where applicable, about cancellation rights (ICOB 5.3.12 R to ICOB 5.3.14 G); and1

    7. (g)

      information, where applicable, about the extent and level of compensation cover and how further information can be obtained about compensation arrangements, if not already included in (a).1

  2. (2)

    The following exemptions from (1) apply:

    1. (a)

      Telephone sales

      If a non-investment insurance contract is concluded by telephone, provided the retail customer gives his explicit consent to receiving only limited information, an insurance intermediary may proceed on the basis of at least the following information:1

      1. (i)

        name of the insurance undertaking;

      2. (ii)

        type of insurance and cover;

      3. (iii)

        significant features and benefits;

      4. (iv)

        significant and unusual exclusions or limitations;

      5. (v)

        the total price to be paid by the retail customer for the non-investment insurance contract (or, if an exact price cannot be indicated, the basis for calculation of the price enabling the retail customer to verify it);

      6. (vi)

        notice of the possibility that other taxes or costs may exist in respect of the non-investment insurance contract that are not payable via the insurance intermediary or imposed by him;

      7. (vii)

        the existence or absence of the right of cancellation and, where applicable, the duration of the cancellation period and the conditions for exercising the right to cancel, including information on the amount which the retail customer may be required to pay;

      8. (viii)

        a telephone number or address to which a claim may be notified; and

      9. (ix)

        that other information is available on request and the nature of that information.

    If the retail customer does not give his explicit consent to receiving limited information, and the parties wish to proceed by telephone, the insurance intermediary must prior to the conclusion of the contract provide all of the information required by (1) orally to the retail customer.1

    1. (b)

      Certain other means of distance communication

      If the non-investment insurance contract is concluded at the retail customer's request using a means of distance communication (other than by telephone) which does not enable provision of the information referred to in ICOB 5.3.6 R(1) in a durable medium before the conclusion of the contract, the insurance intermediary must provide the following information by other means before the conclusion of the contract:

      1. (i)

        name of the insurance undertaking;

      2. (ii)

        type of insurance and cover;

      3. (iii)

        significant features and benefits;

      4. (iv)

        significant and unusual exclusions or limitations;

      5. (v)

        the total price to be paid by the retail customer for the non-investment insurance contract (or, if an exact price cannot be indicated, the basis for calculation of the price enabling the retail customer to verify it);

      6. (vi)

        notice of the possibility that other taxes or costs may exist in respect of the non-investment insurance contract that are not payable via the insurance intermediary or imposed by him;

      7. (vii)

        the existence or absence of the right of cancellation and, where applicable, the duration of the cancellation period and the conditions for exercising the right to cancel, including information on the amount which the retail customer may be required to pay; and

      8. (viii)

        a telephone number or address to which a claim may be notified.

ICOB 5.3.7G

[deleted]

1

On conclusion of a contract which is a distance contract

ICOB 5.3.8R

When a non-investment insurance contract which is a distance contract is concluded in accordance with ICOB 5.3.6 R(2)(a) or (b), an insurance intermediary must provide a retail customer with the information in ICOB 5.3.6 R(1) in a durable medium immediately after conclusion of the contract.

Information about the claims handling process

ICOB 5.3.9R

The information about the claims handling process that the insurance intermediary must provide to the retail customer in accordance with ICOB 5.3.4 R(2) and ICOB 5.3.6 R(1)(e) is:

  1. (1)

    the address, telephone number or other point of initial contact for notifying a claim; and

  2. (2)

    the information the retail customer must provide to the insurance undertaking when notifying a claim.

ICOB 5.3.10R

The information in ICOB 5.3.9 R(1) and (2) must be provided in the same document.

ICOB 5.3.11G

The information in ICOB 5.3.9 R may be incorporated into another document or provided as a stand-alone document.

Information about cancellation

ICOB 5.3.12R

The information about cancellation that the insurance intermediary must provide to the retail customer in accordance with ICOB 5.3.4 R(3) or ICOB 5.3.6 R(1)(f) is:

  1. (1)

    the existence or absence of a right to cancel in accordance with ICOB 6.2.1 R; and

  2. (2)

    where a right to cancel exists:

    1. (a)

      the duration of the cancellation period, in accordance with ICOB 6.2.2 R;

    2. (b)

      the conditions for exercising the right to cancel, including information on the amount which the retail customer may be required to pay;

    3. (c)

      the consequences of not exercising the right to cancel; and

    4. (d)

      how the right to cancel may be exercised, including the address to which the notification of cancellation should be sent.

ICOB 5.3.13G

The information in ICOB 5.3.12 R should be sufficiently clear, prominent and informative to enable the retail customer to understand the right to cancel.

ICOB 5.3.14G

Where the notice of the right to cancel forms part of another document, or is one of a number of documents provided to the retail customer at the same time, the insurance intermediary should ensure that the presence of the notice of the right to cancel is drawn to the retail customer's attention.

Renewal

ICOB 5.3.15R

If a non-investment insurance contract with a retail customer, with a duration of no more than one year, is due for renewal, ICOB 5.3.16 R to ICOB 5.3.23 G apply in place of ICOB 5.3.1 R to ICOB 5.3.8 R.

ICOB 5.3.16R

If a non-investment insurance contract is of no more than one month's duration and its terms provide for automatic renewal and for cancellation at the retail customer's option, ICOB 5.3.1 R to ICOB 5.3.8 R and ICOB 5.3.18 R to ICOB 5.3.23 G do not apply, except that ICOB 5.3.12 R to ICOB 5.3.14 G apply if cancellation rights exist under ICOB 6, but if any changes are made to the terms or conditions of the policy, ICOB 5.3.21 R applies.

ICOB 5.3.17G

An example of a non-investment insurance contract referred to at ICOB 5.3.16 R is a health cash plan with a monthly renewal cycle.

ICOB 5.3.18R

An insurance intermediary must:

  1. (1)

    if the insurance undertaking is willing to invite renewal of the policy, provide the retail customer with renewal terms in a durable medium in accordance with ICOB 5.3.21 R no less than 21 days before the expiry of the policy; or

  2. (2)

    notify the retail customerno less than 21 days before the expiry of the policy if the insurance undertaking is not willing to invite renewal or that the insurance intermediary no longer deals with the insurance undertaking.

ICOB 5.3.19G

ICOB 5.3.18 R(2) includes circumstances where the insurance undertaking is not willing to invite renewal through the insurance intermediary in contact with the retail customer.

ICOB 5.3.20G

ICOB 5.3.15 R has the effect that a renewal of a non-investment insurance contract of more than one year's duration must be treated as a new sale, in order to comply with the DMD. A renewal of a non-investment insurance contract which has been extended in accordance with ICOB 5.3.22 R(4), so that it is longer than one year, must also be treated as a new sale. For these contracts an insurance intermediary should provide information in accordance with the rules in ICOB 5.3.1 R to ICOB 5.3.8 R and not ICOB 5.3.15 R.

ICOB 5.3.21R

The information to be provided to the retail customer in accordance with ICOB 5.3.16 R or ICOB 5.3.18 R(1) is:

  1. (1)

    a statement of any changes to the terms of the policy;

  2. (2)

    an explanation of those changes, where necessary;

  3. (3)

    any changes to the directive-required information in ICOB 5.5.20 R (subject to ICOB 5.5.17 G to ICOB 5.5.19 R);

  4. (4)

    the statement of price at ICOB 5.5.14 R;

  5. (5)

    information about cancellation (ICOB 5.3.12 R to ICOB 5.3.14 G); and

  6. (6)

    a prominent statement of the retail customer's right to request a new policy document.

ICOB 5.3.22R

ICOB 5.3.18 R and ICOB 5.3.21 R do not apply where:

  1. (1)

    the insurance intermediary has reason to believe that the retail customer does not wish to renew the policy through it;

  2. (2)

    the insurance intermediary has notified the retail customer that it does not wish to act for him on renewal;

  3. (3)

    the retail customer has already been notified that the insurance undertaking will not invite renewal; or

  4. (4)

    the retail customer requests an extension to the non-investment insurance contract for a period less than that of the original non-investment insurance contract.

ICOB 5.3.23G
  1. (1)

    Examples of situations where the insurance intermediary would have reason to believe that the retail customer does not intend to renew are travel insurance for a single trip, mortgage payment protection insurance where the mortgage has been repaid, or creditor insurance tied to the term of a loan.

  2. (2)

    An insurance intermediary who contacts a retail customer at least 21 days before expiry of the policy to check whether the retail customer wishes to renew, can rely on an oral statement by the retail customer that he does not wish to renew or on the retail customer's failure to respond to a request in a durable medium to contact the insurance intermediary by a specified date if he wishes to renew.

Mid-term changes

ICOB 5.3.24R

For the duration of a non-investment insurance contract an insurance intermediary must notify a retail customer of:

  1. (1)

    changes to the premium, unless the change conforms to a previously disclosed formula;

  2. (2)

    changes to any term or condition of the contract, together with an explanation of any implications of the change where necessary; and

  3. (3)

    changes to the directive-required information in ICOB 5.5.20 R(22), for a non-investment insurance contract that is a pure protection contract (subject to ICOB 5.5.19 R).

ICOB 5.3.25R
  1. (1)

    If an insurance undertaking changes the premium or any term or condition of a non-investment insurance contract the insurance intermediary must provide the retail customer with the information referred to in ICOB 5.3.24 R, in a durable medium, in good time before the change takes effect, unless (2) applies.

  2. (2)

    If the change referred to in (1) is at the request of the retail customer, and it is impracticable to provide the information in ICOB 5.3.24 R in a durable medium before the change takes effect, the insurance intermediary must:

    1. (a)

      explain the implications of the change to the retail customer before the change takes effect; and

    2. (b)

      provide the retail customer with the information referred to in ICOB 5.3.24 R promptly after the change takes effect, in a durable medium.

ICOB 5.3.26G

ICOB 5.3.24 R(1) means that an insurance intermediary does not need to notify a retail customer of a change to a premium which has previously been disclosed to the retail customer, such as a periodic percentage increase, or if the premium for creditor insurance adjusts according to a previously disclosed formula, depending on the level of the debt. However, if, for example, the insurance undertaking alters the formula for calculating the changes to the premium, this would need to be notified to the retail customer by the insurance intermediary.

ICOB 5.3.27G

When explaining the implications of a change in accordance with ICOB 5.3.24 R (2) or ICOB 5.3.25 R(2)(a) to a retail customer, an insurance intermediary should explain any changes to the benefits and significant and unusual exclusions arising from the change.

ICOB 5.3.28G

Insurers and insurance intermediaries will need to consider whether mid-term changes are compatible with the original non-investment insurance contract, in particular whether that non-investment insurance contract included terms reserving the right to vary premiums, charges or contract terms and conditions. Insurers and insurance intermediaries also need to ensure that any contract terms which reserve the right to make variations are not themselves unfair under the Unfair Terms Regulations. The FSA may, as a qualifying body under the Unfair Terms Regulations, issue from time to time case summaries or guidance of potential relevance to such variation terms (see ENF 20).

1Group policies sold to retail customers

ICOB 5.3.29R

1When an insurance intermediary sells a group policy to a retail customer the terms of which provide for persons, other than the retail customer who concludes the non-investment insurance contract, to become policyholders, the insurance intermediary must, promptly after the conclusion of the contract:

  1. (1)

    provide a policy document and a policy summary containing the information in ICOB 5.5.5 R except ICOB 5.5.5 R (6) (cross-references to the policy document) to the retail customer;

  2. (2)

    inform the retail customer that he should:

    1. (a)

      provide the policy summary containing the information in (1) to each policyholder who is capable of being a retail customer; and

    2. (b)

      inform each policyholder that a copy of the policy document is available on request; and

  3. (3)

    if the policy replaces a previous group policy, inform the retail customer that he should inform each policyholder who is capable of being a retail customer of any changes to the information in the policy summary.

ICOB 5.3.30G
  1. (1)

    1The policyholder referred to in ICOB 5.3.29 R is a person who has rights under the policy to make a claim on the insurance undertaking of the policy (as distinct from a person who can only make a claim on, for example, his employer or on trustees in respect of the policy (see ICOB 1.2.15 R and ICOB 1.2.16 G). Such a policyholder will typically be a retail customer under ICOB.

  2. (2)

    The policy summary information to be provided to policyholders in accordance with ICOB 5.3.29R (2) can be provided in any form, for example, on an employer's intranet, in a staff handbook or in a separate booklet, providing it is in writing.