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ICOB 7.4 Duties of insurance intermediaries

ICOB 7.4.1R

ICOB 7.4 applies to an insurance intermediary.

ICOB 7.4.2G

ICOB 7.4 will usually apply to an insurance intermediary that is not an insurer, but it may also apply to an insurer, for example, if it were dealing with a claim on a policy insured by another insurance undertaking.

An insurance intermediary's duty of care, skill and diligence

ICOB 7.4.3R

An insurance intermediary, when acting for a customer in relation to a claim, must act with due care, skill and diligence.

ICOB 7.4.4G

The rules and guidance in ICOB 7.4 do not seek to set out the full extent of the duties owed by the insurance intermediary to any person for whom it acts, nor do they displace the general law on the duties of an insurance intermediary.

An insurance intermediary's duty to avoid conflicts of interest

ICOB 7.4.5R
  1. (1)

    An insurance intermediary must not, in connection with any claim, put itself in a position where its own interest, or its duty to any person for whom it acts, conflicts with its duty to any customer, unless:

    1. (a)

      it made proper disclosure to its customer of all information needed to put its customer in a position where he can give informed consent to the arrangement; and

    2. (b)

      it has obtained the prior informed consent of the customer.

  2. (2)

    An insurance intermediary must decline to act for the person or customer referred to in (1) or any of them unless, in the particular circumstances of the case, disclosure and informed consent are sufficient to enable it to reconcile the conflict.

ICOB 7.4.6G

ICOB 7.4.5 R imposes a requirement on an insurance intermediary to avoid conflicts of interest in relation to claims where it acts on behalf of a customer, unless it can manage them by disclosure to, and the obtaining of consent from, its customer.

ICOB 7.4.7G

An insurance intermediary should consider whether it is possible to manage the conflict by disclosing the conflict to the customer and obtaining his consent. Where an insurance intermediary acts for a customer in arranging a policy, it is likely to be the agent for that1 customer and any other customers who are policyholders under that policy1 in connection with the preparation and handling of any claim against the insurance undertaking. If the insurance intermediary intends to be the agent of an insurance undertaking in relation to claims under that policy, it will need to consider whether it is at risk of putting itself in the position where it cannot act without some breach of duty either to the insurance undertaking or the customer making the claim1. The insurance intermediary should consider whether disclosure and consent are sufficient to reconcile the conflicting obligations. An example of a circumstance in which disclosure and consent are unlikely to be sufficient, and when an insurance intermediary may well consider that it should not act for the insurance undertaking or the customer (or both), is where the insurance intermediary knows that its customer will, to obtain a quick payment, accept a low amount in settlement of a claim and also knows the insurance undertaking is willing to settle for a higher amount.

ICOB 7.4.7AR

ICOB 7.4.5 R to ICOB 7.4.7 G do not apply to a common platform firm if SYSC 10.1 (conflicts of interest) applies to the firm.2

Other notifications and actions in relation to claims

ICOB 7.4.8R

If an insurance intermediary acts for an insurance undertaking and not a customer in relation to a claim on a contract which it arranged, the insurance intermediary must inform the customer that, in relation to that claim, it is acting on behalf of the insurance undertaking, and not the customer.

ICOB 7.4.9G

ICOB 7.4.8 R would apply, for example, where an insurance intermediary has delegated authority for claims handling and deals with a claim in relation to a contract that it sold to a customer, if the insurance intermediary is not acting on behalf of that customer in relation to the claim.

ICOB 7.4.10R

If an insurance intermediary is notified of a claim in relation to a policy which it has arranged, and the insurance undertaking has not given it the authority to deal with that claim, it must:

  1. (1)

    forward the notification to the insurance undertaking promptly; or

  2. (2)

    inform the customer immediately that it cannot deal with the notification.