Part

ICOB Insurance: Conduct of Business

Chapter

Product disclosure

Printed on: 23/11/2024

Rulebook at: 01/07/2005

ICOB 5

Product
disclosure

ICOB 5.1

Application and purpose

  • 14/01/2005

Application who and what?

ICOB 5.1.1

handbook-rule

This chapter applies to:

  1. (1) an insurer;
  2. (2) an insurance intermediary other than when introducing;
  3. (3) a managing agent.
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ICOB 5.1.2

handbook-rule
Throughout this chapter references to an insurer apply equally to a managing agent.
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ICOB 5.1.3

handbook-guidance
The definition of insurance intermediary includes an insurer when the insurer is carrying on insurance mediation activities, for example when, through its sales force, it advises on or arranges its own non-investment insurance contracts or those of another insurer.
  • 14/01/2005

ICOB 5.1.4

handbook-guidance
This chapter applies to the sale, renewal and certain changes to a non-investment insurance contract with a retail customer or a commercial customer.
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ICOB 5.1.5

handbook-guidance
ICOB 5.1.6 G shows the provisions in this chapter which apply when a firm deals with a retail customer and those which apply when a firm deals with a commercial customer.
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ICOB 5.1.6

handbook-guidance

Application of ICOB 5 by customer type. This table belongs to ICOB 5.1.5 G.

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ICOB 5.1.7

handbook-guidance
ICOB 5.5.18 R to ICOB 5.5.19 R (relating to directive-required information) qualify the general provisions on territorial scope set out in ICOB 1.3.
  • 14/01/2005

ICOB 5.1.8

handbook-rule
If information required by this chapter to be provided to a customer duplicates information required in ICOB 4 (Advising and selling standards), that information does not need to be provided twice unless required by a specific rule. However, the policy summary must always contain the information set out in ICOB 5.5.5 R except as specified in ICOB 5.4.8 R(1) and ICOB 5.5.1 R.
  • 14/01/2005

Purpose

ICOB 5.1.9

handbook-guidance
  1. (1) This chapter reinforces Principle 7 (Communications with clients), which requires a firm to pay due regard to the needs of its clients and communicate information to them in a way that is clear, fair and not misleading.
  2. (2) The purpose of this chapter is to ensure that customers have the necessary information to make an informed choice about whether or not to buy a specific non-investment insurance contract and whether a contract continues to meet their needs.
  • 14/01/2005

ICOB 5.1.10

handbook-guidance
This chapter also implements relevant requirements of the Distance Marketing Directive, the Consolidated Life Directive and Third Non-Life Directive.
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ICOB 5.2

Information - responsibilities of insurers and intermediaries

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ICOB 5.2.1

handbook-guidance
This section covers the responsibility for content, production and provision to the customer of information. It provides first for the typical situation in which both insurer and insurance intermediary are UK-based, and also provides for cross-border situations and those in which insurance undertakings or intermediaries are not firms or where the sale involves a connected contract.
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If both the insurer and the insurance intermediary are UK-based

ICOB 5.2.2

handbook-rule
If an insurer and an insurance intermediary (other than an authorised professional firm carrying on non-mainstream regulated activities or a firm selling connected contracts) each operates from an establishment maintained by it in the United Kingdom, the insurer is responsible for the content and production of the information referred to at ICOB 5.2.9 R and the insurance intermediary is responsible for providing that information to the customer.
  • 14/01/2005

If either the insurance undertaking or the insurance intermediary is not UK-based, not authorised, an authorised professional firm or a firm selling connected contracts

ICOB 5.2.3

handbook-rule
  1. (1) If an insurance intermediary operates from an establishment maintained by it in the United Kingdom, but an insurance undertaking does not, the insurance intermediary is responsible for the content and production of the information in ICOB 5.2.9 R as well as for providing it to the customer.
  2. (2) Unless (3) applies, if an insurer operates from an establishment maintained by it in the United Kingdom but the intermediary does not, is not authorised, is a firm selling connected contracts, or is an authorised professional firm carrying on non-mainstream regulated activities, the insurer is responsible for the provision of the information in ICOB 5.2.9 R to the customer, where the non-investment insurance contract relates to a customer habitually resident in the EEA, subject to ICOB 5.2.5 R, as well as for the content and production of it.
  3. (3) If an insurer operates from an establishment maintained by it in the United Kingdom, but the intermediary does not, and the customer is habitually resident outside the EEA, ICOB 5 does not apply to the insurer.
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ICOB 5.2.4

handbook-guidance
  1. (1) ICOB 5.2.3 R(2) makes the insurer responsible for the content, production and provision of information to customers dealing through:
    1. (a) intermediaries in the United Kingdom who do not have Part IV permission (for example, travel agents selling connected contracts, exempt professional firms and intermediaries who do not have an establishment in the United Kingdom); or
    2. (b) firms selling connected contracts; or
    3. (c) authorised professional firms carrying on non-mainstream regulated activities.
  2. (2) The insurer is not responsible for the content, production or provision of information to customers outside the EEA unless the insurer is acting as the insurance intermediary in contact with the customer.
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Exceptions where insurers deal with certain other intermediaries

ICOB 5.2.5

handbook-rule

If an insurer deals with an intermediary who operates from an establishment in the United Kingdom but does not need to be authorised, who is a firm selling connected contracts, or who is an authorised professional firm carrying on non-mainstream regulated activities, despite ICOB 5.2.3 R(2) the insurer need not produce or provide:

  1. (1) a policy summary; and
  2. (2) in respect of a distance sale, the directive-required information at ICOB 5.5.20 R(16) to (21).
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ICOB 5.2.6

handbook-rule
If ICOB 5.2.3 R requires an insurer to provide information to the customer, the rules at ICOB 5.3 and ICOB 5.4, where they refer to an insurance intermediary, must be read as applying to an insurer.
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Insurers not operating from establishments in the United Kingdom

ICOB 5.2.7

handbook-rule
Where an insurer is not operating from an establishment maintained by it in the United Kingdom, and there is no insurance intermediary which operates from an establishment maintained by it in the United Kingdom, the insurer need produce and provide only the directive-required information at ICOB 5.5.20 R(1) to (15) when ICOB 1.3.4 R or ICOB 1.3.5 R applies.
  • 14/01/2005

ICOB 5.2.8

handbook-guidance
If an insurer does not operate from an establishment in the United Kingdom and deals with an insurance intermediary which does not have an establishment in the United Kingdom, and ICOB 1.3.4 R or ICOB 1.3.5 R applies, the insurer is responsible for the content and must produce and provide the information required by those rules.
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Information to be provided to customers

ICOB 5.2.9

handbook-rule

The information which is required is:

  1. (1) a policy summary (ICOB 5.5.1 R to ICOB 5.5.13 G);
  2. (2) directive-required information (ICOB 5.5.16 R to ICOB 5.5.26 G);
  3. (3) a policy document (ICOB 5.5.27 R to ICOB 5.5.28 G);
  4. (4) information about the claims handling process (ICOB 5.3.9 R to ICOB 5.3.11 G);
  5. (5) information, where relevant, about cancellation rights (ICOB 5.3.12 R to ICOB 5.3.14 G); and
  6. (6) 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).
  • 14/01/2005

ICOB 5.2.10

handbook-guidance
The directive-required information referred to in ICOB 5.2.9 R(2) does not need to be in a separate document. It may be incorporated into another document such as the policy document or included in a document of which the policy summary is a part.
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ICOB 5.2.10A

handbook-guidance
Where any rule in this chapter refers to information about fees to be provided to customers, the fees so mentioned are all fees throughout the distribution chain between the insurer and the customer and which are payable by the customer in addition to the premium.
  • 14/01/2005

ICOB 5.2.11

handbook-rule
If an insurer agrees with an insurance intermediary that it will take on any part of the insurance intermediary's responsibilities required by this chapter, then the relevant rule will apply to the insurer as if it were the insurance intermediary.
  • 14/01/2005

ICOB 5.2.11A

handbook-rule
An insurer may agree with an insurance intermediary that the insurance intermediary will be responsible for producing and providing to the retail customer the price and payment information referred to in ICOB 5.5.20 R (17) (b) to (f).
  • 14/01/2005

ICOB 5.2.12

handbook-rule
If an insurance intermediary is required by this chapter to provide information to a customer in relation to a non-investment insurance contract, the insurer must produce that information in good time to enable the insurance intermediary to comply with the rules in this chapter, or must produce it promptly in response to a request by the insurance intermediary.
  • 14/01/2005

Provision of information to customers "in good time"

ICOB 5.2.13

handbook-guidance
Some of the rules in this chapter require information to be provided to retail customers "in good time" before the conclusion of a contract and to commercial customers "in good time" before expiry of an existing contract. In determining what is "in good time" an insurance intermediary should consider the importance of the information to the customer in helping him to decide whether a contract meets his needs and the point in the sales process or renewal process at which the information may be most useful.
  • 14/01/2005

ICOB 5.2.14

handbook-guidance
If the rules in this chapter require a policy document to be given to a customer before conclusion of the contract, this must be the policy document and not a specimen. If an insurance intermediary provides a copy of the policy terms to a customer for information before conclusion of the contract, in circumstances where the rules in this chapter do not require it, a specimen of the terms can be given to the customer.
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ICOB 5.3

Provision of information to retail customers

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

ICOB 5.3.1

handbook-rule

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.
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On conclusion of a contract which is not a distance contract

ICOB 5.3.2

handbook-guidance
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).
  • 14/01/2005

ICOB 5.3.3

handbook-guidance
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.
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ICOB 5.3.4

handbook-rule

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).
  • 14/01/2005

ICOB 5.3.5

handbook-guidance
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.
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Before the conclusion of a distance contract

ICOB 5.3.6

handbook-rule
  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);
    6. (f) information, where applicable, about cancellation rights (ICOB 5.3.12 R to ICOB 5.3.14 G); and
    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).
  2. (2) The following exemptions from (1) apply:
    1. (a) Telephone sales
    2. 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. (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.
    3. 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.
    4. (b) Certain other means of distance communication
    5. 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.
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On conclusion of a contract which is a distance contract

ICOB 5.3.8

handbook-rule
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.
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Information about the claims handling process

ICOB 5.3.9

handbook-rule

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.
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ICOB 5.3.10

handbook-rule
The information in ICOB 5.3.9 R(1) and (2) must be provided in the same document.
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ICOB 5.3.11

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

ICOB 5.3.12

handbook-rule

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.
  • 14/01/2005

ICOB 5.3.13

handbook-guidance
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.
  • 14/01/2005

ICOB 5.3.14

handbook-guidance
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.
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Renewal

ICOB 5.3.15

handbook-rule
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.
  • 14/01/2005

ICOB 5.3.16

handbook-rule
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.
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ICOB 5.3.17

handbook-guidance
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.
  • 14/01/2005

ICOB 5.3.18

handbook-rule

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 customer no 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.
  • 14/01/2005

ICOB 5.3.19

handbook-guidance
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.
  • 14/01/2005

ICOB 5.3.20

handbook-guidance
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.
  • 14/01/2005

ICOB 5.3.21

handbook-rule

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.
  • 14/01/2005

ICOB 5.3.22

handbook-rule

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.
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ICOB 5.3.23

handbook-guidance
  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.
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Mid-term changes

ICOB 5.3.24

handbook-rule

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).
  • 14/01/2005

ICOB 5.3.25

handbook-rule
  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.
  • 14/01/2005

ICOB 5.3.26

handbook-guidance
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.
  • 14/01/2005

ICOB 5.3.27

handbook-guidance
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.
  • 14/01/2005

ICOB 5.3.28

handbook-guidance
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).
  • 14/01/2005

Group policies sold to retail customers

ICOB 5.3.29

handbook-rule

When 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.
  • 14/01/2005

ICOB 5.3.30

handbook-guidance
  1. (1) The 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.
  • 14/01/2005

ICOB 5.4

Provision of information to commercial customers

  • 14/01/2005

Before the conclusion of the contract

ICOB 5.4.1

handbook-rule

Before the conclusion of a non-investment insurance contract, an insurance intermediary must provide a commercial customer with:

  1. (1) sufficient information to enable the commercial customer to make an informed decision about the contract being proposed;
  2. (2) the directive-required information in ICOB 5.5.20 R(1) to (3) or ICOB 5.5.20 R(4) to (15) in writing (subject to ICOB 5.5.17 G to ICOB 5.5.19 R), unless the contract is being concluded by telephone; and
  3. (3) the premium and any fees relating to the non-investment insurance contract.
  • 14/01/2005

ICOB 5.4.2

handbook-guidance
Where a non-investment insurance contract with a commercial customer is concluded by telephone, ICOB 5.4.1 R (2) does not apply. The insurance intermediary must comply with ICOB 5.4.1 R(1) and (3) before conclusion of the contract and provide the information in ICOB 5.4.1 R (2) immediately after conclusion of the contract in accordance with ICOB 5.4.4 R.
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ICOB 5.4.3

handbook-guidance
  1. (1) The information in ICOB 5.4.1 R(1) that an insurance intermediary provides may vary according to the commercial customer's knowledge, experience and ability.
  2. (2) In deciding what information is sufficient, the insurance intermediary should take account of the main benefits, exclusions, limitations and conditions of a policy.
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On conclusion of the contract

ICOB 5.4.4

handbook-rule
If the information referred to in ICOB 5.4.1 R(2) and (3) was not provided in writing before the non-investment insurance contract was concluded, it must be provided in writing immediately afterwards.
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ICOB 5.4.5

handbook-rule
An insurance intermediary must provide a commercial customer with a policy document promptly after the conclusion of the non-investment insurance contract.
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ICOB 5.4.6

handbook-guidance
  1. (1) In considering how to comply with the requirement to be prompt in ICOB 5.4.5 R, the insurance intermediary should take account of the complexity of the contract and the needs and expectations of the commercial customer
  2. (2) Where insurance cover commences before the full terms and conditions have been agreed, the policy document should be provided to the commercial customer promptly after the terms and conditions have been finalised.
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ICOB 5.4.7

handbook-guidance
As stated in ICOB 1.2.8 R, ICOB 5.4.5 R applies to contracts with commercial customers that are contracts of large risks where the risk is located within the European Economic Area as well as other non-investment insurance contracts.
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Group policies sold to commercial customers

ICOB 5.4.8

handbook-rule

When an insurance intermediary sells a group policy to a commercial customer the terms of which provide for persons, other than the commercial 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 commercial customer (but a policy summary need not be supplied if there is no policyholder who would be a retail customer);
  2. (2) where a policy summary is provided, inform the commercial 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) where a policy summary is provided, if the policy replaces a previous group policy, inform the commercial 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.
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ICOB 5.4.9

handbook-guidance
  1. (1) The policyholder referred to in ICOB 5.4.8 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. Examples of types of group policies that may fall within the scope of ICOB 5.4.8 R are a group health policy for employees or a personal accident policy for an affinity group such as a sports club or trades union.
  2. (2) The policy summary information to be provided to policyholders in accordance with ICOB 5.4.8 R(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.
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Renewal

ICOB 5.4.10

handbook-rule
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ICOB 5.4.11

handbook-rule

Unless the insurance intermediary has reason to believe that the commercial customer does not wish to renew the policy or the insurance intermediary has notified the commercial customer that it will not act for him on renewal, the insurance intermediary must, in good time before the expiry of the policy:

  1. (1) provide renewal terms to the commercial customer; or
  2. (2) notify the commercial customer that the insurance undertaking is not willing to invite renewal of the policy or that the insurance intermediary no longer deals with the insurance undertaking.
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ICOB 5.4.12

handbook-guidance
ICOB 5.4.11 R(2) includes circumstances where the insurance undertaking is not willing to invite renewal through the insurance intermediary in contact with the commercial customer.
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ICOB 5.4.13

handbook-rule
A commercial customer may consent not to receive the information in ICOB 5.4.11 R if the insurance intermediary has explained to the commercial customer the consequences of giving that consent before it is given.
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ICOB 5.4.14

handbook-rule
ICOB 5.4.11 R and ICOB 5.4.13 R do not apply to renewal of a non-investment insurance contract of no more than one month's duration whose terms provide for automatic renewal and for cancellation at the commercial customer's option. Instead, the commercial customer must be notified of changes to the terms and conditions of the contract, including the premium, before the changes take effect.
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Mid-term changes

ICOB 5.4.15

handbook-rule
For the duration of a non-investment insurance contract that is a pure protection contract an insurance intermediary must notify a commercial customer of any changes to the information in ICOB 5.5.20 R(22) (subject to ICOB 5.5.19 R) and should take reasonable steps to do so in good time before the change takes effect.
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ICOB 5.5

Information form and content

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Policy summary

ICOB 5.5.1

handbook-rule

A policy summary must contain only:

  1. (1) the information specified in ICOB 5.5.5 R in relation to a non-investment insurance contract; and
  2. (2) at the option of the insurer or insurance intermediary:
    1. (a) all or part of the information in ICOB 5.5.14 R (Statement of price);
    2. (b) for any applicable compensation scheme mentioned in ICOB 5.5.5 R(12), the extent and level of cover and how further information can be obtained; and
    3. (c) the information on cancellation in ICOB 5.3.12 R.
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ICOB 5.5.2

handbook-rule

A policy summary, if not set out in a separate document, must be:

  1. (1) in a prominent place within the other document and clearly identifiable as key information that the retail customer should read; and
  2. (2) separate from the other content of the document in which it is included.
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ICOB 5.5.3

handbook-guidance
  1. (1) A policy summary is a generic document, but the information in ICOB 5.5.5 R can be personalised if the insurer or insurance intermediary wishes, with the details applicable to the insurance cover being provided for a particular retail customer.
  2. (2) A policy summary should be produced as an informative document. It is not intended to communicate the full terms and conditions of a non-investment insurance contract to the retail customer. The content should properly describe the contract but should not overload the retail customer with detail.
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Key features as an alternative to a policy summary

ICOB 5.5.4

handbook-rule
A firm may provide key features that meet the requirements of COB 6 on the content of the key features , instead of a policy summary. The key features must include the information required in ICOB 5.5.5 R(6), (10) and (13) (cross-references from significant and unusual exclusions or limitations to related sections of the policy document, a telephone number or address for notification of claims and the key facts logo), in addition to that required by COB 6, but this rule does not require a firm to meet the requirements of COB 6.5.12R or COB 6.5.38R.
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ICOB 5.5.5

handbook-rule

Policy summary content. This table belongs to ICOB 5.5.1 R.

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ICOB 5.5.6

handbook-guidance

When producing the information in ICOB 5.5.5 R a firm should have regard to the nature and complexity of the non-investment insurance contract in deciding:

  1. (1) how much detail the policy summary should contain; and
  2. (2) what constitutes a significant or unusual exclusion or limitation.
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ICOB 5.5.7

handbook-guidance

The requirement in ICOB 5.5.5 R(3) (type of insurance and cover) can be met in the following ways:

  1. (1) by describing the broad type of non-investment insurance contract, for example:
    1. (a) for motor insurance, whether the cover is comprehensive or third party;
    2. (b) for household insurance, whether accidental damage is included; and
    3. (c) for a pure protection contract, whether the premium is guaranteed, reviewable or renewable; or
  2. (2) if a policy summary provided to a retail customer in a durable medium describes different types of cover available, for example, both comprehensive and third party motor insurance, the retail customer should be informed which type of cover is being offered at the time he is given the policy summary.
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ICOB 5.5.8

handbook-guidance
A significant exclusion or limitation is one that would tend to affect the decision of retail customers generally to buy. In determining what exclusions or limitations are significant an insurer should, in particular, consider the exclusions or limitations that relate to the significant features and benefits in ICOB 5.5.5 R(4). Another type of significant limitation might be that the contract only operates through certain means of communication e.g. telephone or Internet.
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ICOB 5.5.9

handbook-guidance
An unusual exclusion or limitation is one that is not normally found in comparable contracts.
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ICOB 5.5.10

handbook-guidance

Some examples of significant and unusual exclusions or limitations are as follows:

  1. (1) for non-investment insurance contracts that are pure protection contracts or medical insurance: deferred payment periods; exclusion of certain conditions or diseases; exclusion of pre-existing medical conditions, and moratorium periods;
  2. (2) for general insurance contracts: "high risk" electrical items from a household policy; audio equipment from motor insurance; winter sports from travel insurance; and
  3. (3) for all types of non-investment insurance contracts: limits on the amounts of cover; limits on the period for which benefits will be paid; restrictions on eligibility to claim such as age or employment status; excesses.
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ICOB 5.5.11

handbook-rule
The key facts logo must be included in a prominent position at the top of the policy summary, as shown in ICOB 4 Annex 1 for the initial disclosure document, or in a prominent position at the top of the relevant section of the document if the policy summary information is included in another document. The logo may be a different size from that in ICOB 4 Annex 1 but its proportions must not be distorted.
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ICOB 5.5.12

handbook-guidance
The FSA has developed a common 'key facts' logo to be used on significant pieces of information directed to customers. When reproducing the logo, insurers and insurance intermediaries may use colour, providing this does not diminish the prominence of the logo. A specimen of the 'key facts' logo can be obtained from the FSA website: http://www.fsa.gov.uk/pubs/other/keyfacts_logo.
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ICOB 5.5.13

handbook-guidance
A firm should produce a policy summary to a standard of quality and presentation consistent with that used for other documents in relation to the non-investment insurance contract, so that retail customers are not deterred by its appearance from reading it.
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Statement of price

ICOB 5.5.14

handbook-rule

A statement of price must include the following information:

  1. (1) the total amount of the premium for the non-investment insurance contract or, if the premium cannot be indicated, the basis for the calculation of the premium enabling the retail customer to verify it;
  2. (2) for non-investment insurance contracts of more than one year, details of the period for which the premium is valid, whether it will be reviewed at a certain time or at set periods and, if so, when it will be reviewed;
  3. (3) fees, administrative charges and taxes payable by the retail customer via the insurance intermediary in addition to the premium. Fees and administrative charges include any interest payable on the premium, including where the premium is paid by way of a credit agreement taken out either for payment of the premium only or for the purpose of purchasing goods or services as well;
  4. (4) a statement identifying separately the possibility of any taxes not payable via the insurance intermediary;
  5. (5) where the non-investment insurance contract is purchased in connection with other goods or services:
    1. (a) the premium for the non-investment insurance contract, separately from all other prices in relation to the other goods or services, if an additional price is charged; and
    2. (b) whether purchase of the non-investment insurance contract is a requirement of purchasing the other goods or services or not; and
  6. (6) the total price to be paid by the retail customer for the non-investment insurance contract.
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ICOB 5.5.14A

handbook-rule
Where an exact amount, required to be included in a statement of price in accordance with ICOB 5.5.14 R, cannot be indicated, the statement of price must show the basis for calculation of the amount enabling the retail customer to verify it.
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ICOB 5.5.14B

handbook-guidance
A firm may only show the basis of calculation (in accordance with ICOB 5.5.14A R) if it is not possible to show an exact amount. So ICOB 5.5.14A R will not apply where, for example, a creditor insurance policy is financed by means of a loan agreement and it is possible to state the total amount payable in accordance with the requirements under the Consumer Credit Act 1974 to show the total price. In such cases ICOB 5.5.14 R (3) requires the interest payable on the premium to be stated, and ICOB 5.5.14 R (6) requires the total price to be stated.
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ICOB 5.5.15

handbook-guidance
An example of a situation where a premium could not be stated under ICOB 5.5.14 R(1) is a creditor insurance policy where the premium varies according to the level of debt. The statement of price should instead show the basis of calculation, for example, the premium as a percentage of the debt outstanding at specified dates.
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ICOB 5.5.15A

handbook-guidance
If the non-investment insurance contract contains optional elements of cover, the total amount of premium, or the basis for the calculation of the premium, required under ICOB 5.5.14 R(1) should include all optional elements of cover selected by the retail customer.
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Directive-required information

ICOB 5.5.16

handbook-rule
The directive-required information referred to in this chapter is set out in ICOB 5.5.20 R, subject to ICOB 5.5.18 R to ICOB 5.5.19 R.
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ICOB 5.5.17

handbook-guidance
ICOB 5.5.20 R brings together all the directive-required information that must be provided under this chapter. Where information required under ICOB 5.5.20 R has already been provided to a customer in another document, for example a policy summary, it does not need to be provided a second time for the same contract unless required by a specific rule. In some instances it may be possible to meet similar requirements of more than one directive by a single statement, including requirements in ICOB 4.
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ICOB 5.5.18

handbook-rule
The information in ICOB 5.5.20 R(2) and (3) need not be provided for a general insurance contract, if the United Kingdom is not the State of the risk.
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ICOB 5.5.19

handbook-rule
  1. (1) The information in (2) need not be provided for a non-investment insurance contract which is a pure protection contract if, at the time of application, the customer, other than an EEA ECA recipient, is habitually resident:
    1. (a) in an EEA State other than the United Kingdom; or
    2. (b) outside the EEA and he is not present in the United Kingdom.
  2. (2) The information referred to in (1) is:
    1. (a) ICOB 5.5.20 R(4) to (15); or
    2. (b) ICOB 5.5.20 R(22), if the non-investment insurance contract was entered into before 1 July 1994.
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ICOB 5.5.20

handbook-rule

Directive-required information to be provided to customers. This table belongs to ICOB 5.5.16 R.

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ICOB 5.5.22

handbook-rule
Where a non-investment insurance contract is underwritten by more than one insurance undertaking, any rules in this chapter requiring information to be provided to a customer about the insurance undertaking before conclusion of the contract apply only to the first-named insurance undertaking. Details of all the insurance undertakings providing cover must be provided promptly after conclusion of the contract.
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ICOB 5.5.23

handbook-guidance
The relevant supervisory authority in ICOB 5.5.20 R(16)(c) will in most cases be the FSA. Where an incoming EEA firm is providing cross border services, the relevant supervisory authority will be its Home State Regulator.
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ICOB 5.5.24

handbook-guidance
A description of the main characteristics of a non-investment insurance contract in ICOB 5.5.20 R(17)(a) would include the information referred to at ICOB 5.5.5 R(3) to (5) and (7). For a non-investment insurance contract that is a pure protection contract a description would also include a definition of each benefit and each option; information on the premiums for each benefit and the means and duration of payment of them.
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ICOB 5.5.25

handbook-guidance
The relevant out-of-court complaint redress mechanism at ICOB 5.5.5 R(11) and ICOB 5.5.20 R(3), (14) and (19)(a) will in most cases be the Financial Ombudsman Service.
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ICOB 5.5.26

handbook-guidance
The relevant guarantee funds or other compensation arrangements referred to at ICOB 5.5.5 R(12) and ICOB 5.5.20 R(19)(b) will in most cases be the compensation scheme.
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Policy document

ICOB 5.5.27

handbook-rule
A policy document must contain all the contractual terms and conditions.
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ICOB 5.5.28

handbook-guidance
The policy document provided to a customer should contain all the contractual terms and conditions of the contract of insurance with that customer. The policy document can consist of more than one document, but all the documents making up the policy document must be provided to the customer at the same time.
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ICOB 5.6

White labelling

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ICOB 5.6.1

handbook-guidance
The rules in this chapter and in ICOB 4 (Advising and selling standards) require the customer to be informed of the identity of both the insurance undertaking and the insurance intermediary. ICOB 2.2.3 R (Clear, fair and not misleading communication) requires all communications with customers to be clear, fair and not misleading. ICOB 5.5.5 R (Policy summary content) includes the name of the insurance undertaking but not that of the insurance intermediary and ICOB 5.5.1 R does not allow any information to be added to the policy summary in addition to that specified in ICOB 5.5.1 R. The combined effect of these rules is that an insurance intermediary must clearly communicate the identity of the insurance undertaking to the customer.
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ICOB 5.7

Record keeping

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ICOB 5.7.1

handbook-rule

An insurer, or an insurance intermediary where an insurance undertaking does not operate from an establishment in the United Kingdom, must retain for a minimum period of three years after the information has been provided to the customer:

  1. (1) a policy summary; and
  2. (2) a policy document;
in relation to each non-investment insurance contract concluded.
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ICOB 5.7.2

handbook-guidance
If the policy summary and policy document are generic documents that are not specific to the customer, an insurer or an insurance intermediary can keep one copy of each document that it produces, but must retain a copy of any schedule for each customer that forms part of the policy document if the schedule is customer specific.
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ICOB 5.7.3

handbook-guidance
ICOB 2.8.6 G notes that a firm should consider keeping records for longer than three years in case customers complain or take legal action against the firm. An insurer or an insurance intermediary should in particular consider what constitutes an appropriate retention period for records which relate to non-investment insurance contracts which may give rise to claims some time after the inception of the contract (e.g. employers' liability insurance).
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