chap 3 -icobs

Question 1

icobs 1 - application

pure protection contracts- term ins, ci , income protection and ppi

Answer 1

icobs does not apply to reinsurance contracts
icobs does not apply to contracts of large risks where- risk based outside of eea
or for a commercial customer where the risk is based in the eea- but icobs does require evidence of cover to be issued promptly after inception

protection contract- can elect for icobs (favored for gen ins) or cobs (favored for life) regulation

chain of brokers
icobs requires the ‘producing broker’ to comply with icobs as the broker dealing directly with the customer.
all sectors must act in away accordance with fca rules irrespective of regulated by them or not

Question 2

icobs 2 general matters

Answer 2

1. client categorisation
2. communications to client and financial promotions
3. inducements
4. record keeping
5. exclusion of liability and reliance on others

client catogirization diff areas of icobs apply dependingon diff categories of clients

1. policy holder- anyone entitled to make a claim
2. customer- arranges the policy (can be consumer or commercial)
3. consumer- any natural person acting outside of trade or profession
4. commercial customer- a customer who is not a consumer

Question 3

pricing claims - reducing or offering lowest premium must be in line with the control of misleading advertising regulations

inducements - cash, commission, hospitality, goods, training programmes- must not accept any for basis of poor treatment to customers

record keeping and exclusion of liability and reliance of others involves;

Answer 3

record keeping

1. prudent to retain reasons for any recommendation
2. what documentation was provided to the customer
3. how claims have been settled and why

exclusion of liability
firm cannot delegate its responsibility under the regulatory system however it can outsource but it remains responsible for meeting the regulatory requirements

Question 4

icobs 3 distance communications]

distance marketing with consumers
e-commerce with all customers

icobs 4- info about the firm, its services and remumeration involves;

Answer 4

icobs 4

1. general requirements for insurance intermediaries (name and address of firm, confirmation that it is regulated, ownership of firm if greater than 10% holding by an insurer, how to complain via fos)- scope of service eg what it will offer- 1. fair analysis of market, 2 contractual obligation to deal with 1 or more intermediaries, 3 does not give advice on basis of fair analysis of market & under no obligation to deal with one or more insurers)
2. additional requirements for protection policies - demands and needs - where advice is given (its benefits, exclusions, limitations, duration and price info)
3. fee disclosure (not related to premium, eg cost of mid term adjustment, cancellation)
4. commission disclosure for commercial customers (must disclose comm if requested from comm consumer) an associate is an affiliate of a broking firm, an ap
5. initial disclosure document (firm can choose to give the customer an idd - disclosure of everything it offers- fair analysis of market, services being provided, payment, general reg info, complaints fscs

Question 5

ICOBS 5 identifying clients needs and advising

1. general
2. statement of demands and needs
3. advised sales

Answer 5

1. disclosure of material facts- explaining to customer duty to disclose. 2 ensuring cust is asked clear questions about MF’s for consumer these are ensuring
2. they are not making a misrepresentstion
3. explaining possible consequenses if they are reckless in disclosing
4. ask customers specific and clear questions relating to policy being arranged or varied

statement of demands and needs
-establishing the clients requirements
be asked enough questions for assessment to be amde- draw attention to non disclosure
broker should seek to clarify customers circumstances
take into consideration any detail already held on cust
explain duty of disclosure and consequences
statement of demands and needs must be communicated on a durable medium
clear and accutate and in english- if over phone statement of demands and needs to be provided shortly after

for non advised sales - statement of demands and needs is flexible- provide it as part of an app- as an assessment of who wants the products, giving a customer record, providing a key features doc

advised sales broker must take into account
level of cover - cost of contract (via demands and needs)-cover terms (benefits-limitations)
advice on a fair analysis - that a’ sufficinently large no. of insurers have been considered

icobs 5 also applies to renewals even if t&cs same

Question 6

ICOBS 6 product info
general
pre contract (gen ins)
pre and post contract (pure protection contracts)
post contract (protection policies)

Answer 6

general
1. ensure customer can make informed decision 2. appropriate info. 3 in good time., if buying insurance with a product- customer must be told if compulsory or not

certain info must be given to cust before conclusion of contract;

1. law applicable to policy
2. arrangements for handling complaints
3. address of head office giving the cover
4. cancellation rights

pure protection

1. name of insurer and its legal form
2. name of eea state of head office
3. address of head office or branch
4. *definition of each benefit and option
5. *term of contract 6 *means of terminating contract 7 means of payment and duration of payment 8 arrangements for canx period 9 tax applicable to policy, 11 complaints 12 - law applicable (must always be advised of mid term changes and *’s

protection key features is mandatory for ppi - optional for everyone else - must stipulate unusual exclusions etc

Question 7

icobs 7 cancellation
right to cancel (applies at inception and renewal|) insurer MUST give refund within 30 days
effects of cancellation

Answer 7

some policies not subject to cancellation rights;
travel policies, short term policies <1, connected contract eg sold across the counter with a package holiday, canncx right from date of conclusion of contract for protetion from date that the customer is informed its concluded

protection contracts - insurer cannot levy a tor or levy for cancx, also applies to ppi (except if consumer makes a claim during the canx period)

other contracts - cancellation charges must be proportionate

Question 8

iCOBS 8 claim handling
insurers general
motor vehicles liab
insurance intermediaries
employers liab

Answer 8

general
1, handle claims promptly and fairly
2 provide reasonable guidance to make claim
3. not unreasonably reject a claim
4. settle promptly once settlment terms are agreed
can only reject claim if evidence of fraud
cannot reject a claim if there has been a breach of warranty or condition unless the circumstances relate to the breach, and unreasonable to reject a claim if misprepresentation is not a qualifying misrepresentation eg made before entering contract - material facts- insurer can prove it wouldnt have offered terms

broker if handling claims as part of a DA must inform conumer, must avoid conflicts of interest
broker who gets a claim but has no authority to deal with it must pass it onto the insurer promptly & must tell insured they cannot deal with claim

el - helps claimants trace insurers via elto