ICOBS 5.1 General

1. (1) In line with the Consumer Duty, a firm should take reasonable steps to ensure that a customer only buys a policy under which they are eligible to claim benefits.

2. (2) For the purposes of (1), at any time while arranging a policy and in good time before its conclusion, a firm should:

   1. (a) consider whether a customer meets any qualifying requirements to claim the benefits for the different parts of the policy, and will continue to meet those requirements throughout the term of the policy unless there is a change in circumstances; and
   2. (b) if not, inform the customer, including if just in relation to parts of the cover which do not apply,  

   so the customer can take a properly informed decision on whether to buy the policy.

3. (3) Throughout the term of a policy, where a firm is informed (including by customers), or reasonably ought to know, about a change in a customer’s circumstances which could affect their eligibility to claim benefits, the firm should inform the customer of the potential impact on eligibility, in good time, so the customer can make effective, timely and properly informed decisions.
4. (4) An example of where a firm reasonably ought to know about a change in a customer’s circumstances throughout the term of the policy is where the firm was aware of a customer’s age at the time of the conclusion of the policy and therefore reasonably ought to know when the customer will reach or has reached an age limit which could affect their eligibility to claim benefits under the policy. This could be relevant to the steps a firm would be expected to take under ICOBS 5.1.1G(2) and (3).

A firm should bear in mind the restriction on rejecting claims (ICOBS 8.1.1R (3)). Ways of ensuring a customer knows what he must disclose include:

1. (1)

   explaining to a commercial customer the duty to disclose all circumstances material to a policy, what needs to be disclosed, and the consequences of any failure to make such a disclosure;

2. (2)

   ensuring that the commercial customer is asked clear questions about any matter material to the insurance undertaking;

3. (3)

   explaining to the customer the responsibility of consumers to take reasonable care not to make a misrepresentation and the possible consequences if a consumer is careless in answering the insurer's questions, or if a consumer recklessly or deliberately makes a misrepresentation; and

4. (4)

   asking the customer clear and specific questions about the information relevant to the policy being arranged or varied.