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ICOBS 8.3 Insurance intermediaries (and insurers handling claims on another insurer’s policy)

Application: who?


This section applies to an insurance intermediary, and to an insurer handling a claim on another insurance undertaking's policy.

Interaction with the general law


A firm is expected to comply with the general law on the duties of an insurance intermediary. This section does not seek to set out the full extent of those duties.

Conflicts of interest

  1. (1)

    Principle 8 requires a firm to manage conflicts of interest fairly.

  2. (2)

    Generally, this means that a firm handling a claim should not put itself in a position where its own interest, or its duty to anyone for whom it acts, conflicts with its duty to a customer. If it does so, it should have the customer's prior informed consent.

  3. (3)

    If a firm acts for a customer in arranging a policy, it is likely to be the customer's agent (and that of any other policyholders). If the firm intends to be the insurance undertaking's agent in relation to claims, it needs to consider the risk of becoming unable to act without breaching its duty to either the insurance undertaking or the customer making the claim. It should also inform the customer of its intention.

  4. (4)

    A firm should consider whether it is possible to manage such a conflict through disclosure and consent. An example where these are unlikely to be sufficient is where the firm knows both that its customer will accept a low settlement to obtain a quick payment, and that the insurance undertaking is willing to settle for a higher amount.

Dealing with claims notifications without claims handling authority


A firm that does not have authority to deal with a claim should forward any claim notification to the insurance undertaking promptly, or inform the policyholder immediately that it cannot deal with the notification.