Claims handling

Part

ICOBS Insurance: Conduct of Business sourcebook

Chapter

Claims handling

Printed on: 24/12/2024

Rulebook at: 01/10/2011

ICOBS 8

Claims handling

ICOBS 8.1

Insurers: general

06/01/2008

ICOBS 8.1.1

An insurer must:

(1) handle claims promptly and fairly;
(2) provide reasonable guidance to help a policyholder make a claim and appropriate information on its progress;
(3) not unreasonably reject a claim (including by terminating or avoiding a policy); and
(4) settle claims promptly once settlement terms are agreed.

06/01/2008

ICOBS 8.1.2

A rejection of a consumer policy holder's claim is unreasonable, except where there is evidence of fraud, if it is for:

(1) non-disclosure of a fact material to the risk which the policyholder could not reasonably be expected to have disclosed; or
(2) non-negligent misrepresentation of a fact material to the risk; or
(3) breach of warranty or condition unless the circumstances of the claim are connected to the breach and unless (for a pure protection contract):

(a) under a 'life of another' contract, the warranty relates to a statement of fact concerning the life to be assured and, if the statement had been made by the life to be assured under an 'own life' contract, the insurer could have rejected the claim under this rule; or
(b) the warranty is material to the risk and was drawn to the customer's attention before the conclusion of the contract.

06/01/2008

ICOBS 8.2

Motor vehicle liability insurers

06/01/2008

Application: who? what?

ICOBS 8.2.1

(1) This section applies to a motor vehicle liability insurer.
(2) The rules in this section relating to the appointment of claims representatives apply in relation to claims by injured parties resulting from accidents occurring in an EEA State other than the injured party's EEA State of residence which are caused by the use of vehicles insured through an establishment in, and normally based in, an EEA State other than the injured party's EEA State of residence.
(3) The rules in this section relating to claims handling apply in respect of claims arising from any accident caused by a vehicle normally based in the United Kingdom.

[Note: article 20(1) of the Consolidated Motor Insurance Directive]

01/01/2011

Requirement to appoint claims representatives

ICOBS 8.2.2

A firm must have a claims representative in each EEA State other than the United Kingdom (see threshold condition 2A).

06/01/2008

Conditions for appointing claims representatives

ICOBS 8.2.3

A firm must ensure that each claims representative:

(1) is responsible for handling and settling a claim by an injured party;
(2) is resident or established in the EEA State where it is appointed;
(3) collects all information necessary in connection with the settlement of a claim and takes the measures necessary to negotiate its settlement;
(4) possesses sufficient powers to represent the firm in relation to an injured party and to meet an injured party's claim in full; and
(5) is capable of examining cases in the official language(s) of the EEA State of residence of the injured party.

[Note: article 21(1), (4) and (5) of the Consolidated Motor Insurance Directive]

01/01/2011

ICOBS 8.2.4

The requirement to possess sufficient powers does not prevent a claims representative from seeking additional authority or instructions if needed. It does prevent it from declining to deal with, or transferring responsibility for, claims properly referred to it by an injured party, or their representative.

06/01/2008

Notifying the appointment of claims representatives

ICOBS 8.2.5

(1) A firm must notify to the information centres of all EEA States:

(a) the name and address of the claims representative which they have appointed in each of the EEA States;
[Note: article 23(2) of the Consolidated Motor Insurance Directive]
(b) the telephone number and effective date of appointment; and
(c) any material change to information previously notified.

(2) Notification must be made within ten business days of an appointment or of a material change.

01/01/2011

Motor vehicle liability claims handling rules

ICOBS 8.2.6

Within three months of the injured party presenting his claim for compensation:

(1) the firm of the person who caused the accident or its claims representative must make a reasoned offer of compensation in cases where liability is not contested and the damages have been quantified; or
(2) the firm to whom the claim for compensation has been addressed or its claims representative must provide a reasoned reply to the points made in the claim in cases where liability is denied or has not been clearly determined or the damages have not been fully quantified.

[Note: article 22 of the Consolidated Motor Insurance Directive and article 3 of the Consolidated Motor Insurance Directive]

01/01/2011

ICOBS 8.2.7

(1) If liability is initially denied, or not admitted, within three months of any subsequent admission of liability, the firm must (directly, or through a claims representative) make a reasoned offer of settlement, if, by that time, the relevant claim for damages has been fully quantified.
(2) If an injured party's claim for damages is not fully quantified when it is first made, within three months of the subsequent receipt of a fully quantified claim for damages, the firm must (directly, or through a claims representative) make a reasoned offer of damages, if liability is admitted at that time.

06/01/2008

ICOBS 8.2.8

A claim for damages will be fully quantified for the purpose of this section when the injured party provides written evidence which substantiates or supports the amounts claimed.

06/01/2008

Interest on compensation

ICOBS 8.2.9

(1) If the firm, or its claims representative, does not make an offer as required by this section, the firm must pay simple interest on the amount of compensation offered by it or awarded by the court to the injured party, unless interest is awarded by any tribunal.
(2) The interest calculation period begins when the offer should have been made and ends when the compensation is paid to the injured party, or his authorised representative.
(3) The interest rate is the Bank of England's base rate (from time to time), plus 4%.

[Note: article 22 of the Consolidated Motor Insurance Directive. Regulation 6 of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001 makes this rule actionable under section 150 of the Act (Actions for damages) by any person who suffers loss as a result of its contravention]

01/01/2011

ICOBS 8.2.10

A firm will be taken to have received a claim, or a fully quantified claim, for damages when the claim is delivered to it, or a claims representative, by any person by any method of delivery which is lawful in the firm's, or its claims representative's, respective State of residence or establishment.

06/01/2008

ICOBS 8.2.11

The provisions in this section are not intended to, and do not, restrict any rights which the injured party, or its motor vehicle liability insurer, or any other insurer acting on its behalf, may have and which would enable any of them to begin legal proceedings against the person causing the accident or that person's, or the vehicle's, insurers.

06/01/2008

ICOBS 8.3

Insurance intermediaries (and insurers handling claims on another insurer's policy)

06/01/2008

Application: who?

ICOBS 8.3.1

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

06/01/2008

Interaction with the general law

ICOBS 8.3.2

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.

06/01/2008

Conflicts of interest

ICOBS 8.3.3

(1) Principle 8 requires a firm to manage conflicts of interest fairly. SYSC 10 also requires an insurance intermediary to take all reasonable steps to identify conflicts of interest, and maintain and operate effective organisational and administrative arrangements to prevent conflicts of interest from constituting or giving rise to a material risk of damage to its clients.
(2) [deleted]
(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) A firm should in particular consider whether declining to act would be the most reasonable step where it is not possible to manage a conflict, for example 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.

01/04/2009

Dealing with claims notifications without claims handling authority

ICOBS 8.3.4

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.

06/01/2008

ICOBS 8.4

Employers' Liability Insurance

06/03/2011

Application

ICOBS 8.4.1

(1) The general application rule in ICOBS 1.1.1 R applies to this section subject to the modifications in (2).
(2) This section applies to:

(a) any firm solely with respect to the activities of:

(i) carrying out contracts of insurance; or
(ii) managing the underwriting capacity of a Lloyd's syndicate as a managing agent at Lloyd's;

in relation to general insurance contracts and, in either case, including business accepted under reinsurance to close;
(b) all incoming EEA firms or incoming Treaty firms falling within (a) including those providing cross border services.

(3) In this section references to:

(a) an 'employers' liability register' are to the employers' liability register referred to in ICOBS 8.4.4R (1)(a);
(b) a 'director's certificate' are to the statement complying with the requirements in ICOBS 8.4.4R (1)(b); and
(c) employers' liability insurance include business accepted under reinsurance to close covering employers' liability insurance (including business that is only included as employers' liability insurance for the purposes of this section).

06/03/2011

ICOBS 8.4.2

ICOBS 8.4 does not generally apply to activities carried out in relation to a reinsurance contract (see ICOBS 1.1.2 R and ICOBS 1 Annex 1 Part 2 1.1 R) but it does apply to business accepted under reinsurance to close.

06/03/2011

Purpose

ICOBS 8.4.3

The purpose of ICOBS 8.4 is to assist individuals with claims arising out of their course of employment in the United Kingdom for employers carrying on, or who carried on, business in the United Kingdom, to identify an insurer or insurers that provided employers' liability insurance by requiring insurers to produce an employers' liability register. In particular it aims to assist ex-employees whose employers no longer exist or who cannot be located.

06/03/2011

Principal obligation to produce an employers' liability register and supporting documents

ICOBS 8.4.4

(1) A firm carrying out contracts of insurance, or a managing agent managing insurance business, including in either case business accepted under reinsurance to close, which includes United Kingdom commercial lines employers' liability insurance, must:

(a) produce an employers' liability register complying with the requirements in (2) and ICOBS 8 Annex 1;
(b) obtain a written statement, by a director of the firm responsible for the production of the employers' liability register, that to the best of the director's knowledge the register has been properly prepared in accordance with the requirements of ICOBS 8.4; and
(c) obtain an independent assurance report addressing the accuracy and completeness of the employers' liability register, prepared by an auditor satisfying the requirements of SUP 3.4 and SUP 3.8.5 R to 3.8.6 R, and addressed to the directors of the firm.

(2) For the purposes of (1)(a) the employers' liability register is required to:

(a) include the date upon which the register was produced;
(b) include a database which:

(i) reliably stores information required by ICOBS 8 Annex 1;
(ii) in relation to information required by ICOBS 8 Annex 1 1.1R(1), contains accurate information and, in relation to information required by ICOBS 8 Annex 1 1.1R(2), contains information which faithfully reproduces the information that the firm has; and
(iii) has an effective search function which allows a person inputting data included on the register relating to a particular employer over a particular period to retrieve information on the register relating to a potential employers' liability claim corresponding to that employer and period;

(i) individuals with the potential claim, or their authorised representative, or
(ii) any employer to whom the potential claim relates; or
(iii) an insurer which is potentially jointly and severally liable with another firm in relation to the potential claim; or
(iv) a relevant insurance intermediary acting for an insurer in (iii);

(d) allow for requests by a tracing office which meets the conditions in ICOBS 8.4.9R relating to the use of information on the firm's register to the extent that the information is necessary, and used solely, to enable the tracing office to provide comprehensive searching facilities to its users; and
(e) allow for responses to requests or searches in (c) to be provided without delay.

(3) For the purposes of (1)(b) and (c) the director's certificate and independent assurance report must:

(a) relate to a version of the register as at a date no later than 12 months after it is first produced in accordance with (1)(a); and:
(b) be obtained within 3 months of the date in (a).

(4) For the purposes of (1):

(a) United Kingdom commercial lines employers' liability insurance means commercial lines employers' liability insurance where both the employer's business was or is carried on, and the employees' course of employment was or is, in the United Kingdom; and
(b) commercial lines business comprises contracts of insurance carried out in relation to persons whose employers' liability insurance relates to a business or profession they carry on.

06/03/2011

ICOBS 8.4.5

(1) For the purposes of ICOBS 8.4.4R (2)(c) and ICOBS 8.4.4R (2)(d), a firm may put in place appropriate screening on its employers' liability register to monitor:

(a) requests for information and searches to ensure that they are being made for a legitimate purpose by persons falling into one of the categories in ICOBS 8.4.4R (2)(c); and
(b) requests from tracing offices to ensure that the information is necessary, and will only be used by the tracing office, for the purposes of providing users of the tracing service with the same information as the firm itself would have provided had the inquirer approached the firm directly.

If a firm has any reason to suspect that the information is, or may be, being misused then it may restrict the use of the information provided or request its return.
(2) For the purposes of ICOBS 8.4.4R (2)(e) the FSA expects that, in the ordinary course, a person searching or making an information request will be provided with a response within one business day of the initial request.
(3) In the FSA's view, commercial lines business does not include employers' liability insurance provided for retail consumers, for example, in relation to insurance taken out to cover liability in relation to domestic arrangements such as home help.

06/03/2011

FSA notification requirements

ICOBS 8.4.6

A firm must:

(1) notify the FSA, within one month of falling within ICOBS 8.4.1R (2), as to whether or not it, or, if relevant, a member of the syndicates it manages, carries on business falling within ICOBS 8.4.4R (1) and, if it does, include in that notification:

(a) details of the internet address of the firm or tracing office at which the employers' liability register is made available;
(b) the name of a contact person at the firm and their telephone number or postal address, or both; and
(c) the period over which the firm or syndicate member provided cover under relevant policies or, if still continuing, the date that cover commenced; and
(d) the firm's FSA Firm Reference Number; and

(2) ensure that the notification in (1):

(a) is approved and signed by a director of the firm; and
(b) contains a statement that to the best of the director's knowledge the content of the notification is true and accurate.

06/03/2011

Requirement to make employers' liability register and supporting documents available

ICOBS 8.4.7

(1) A firm must make available:

(a) the information on the employers' liability register either:

(i) on the firm's website at the address notified to the FSA in ICOBS 8.4.6R (1); or
(ii) by arranging for a tracing office which meets the conditions in ICOBS 8.4.9 R to make the information available on the tracing office's website; and

(b) on request, the latest director's certificate and independent assurance report.

(2) If a firm arranges for a tracing office to make information available for the purposes of (1)(a)(ii) the firm must:

(a) send to the tracing office copies of its latest director's certificate and independent assurance report;
(b) maintain records of all the tracing information and copies of all documents it has provided to the tracing office;
(c) retain all legal rights in relation to the ownership and use of the information and documents provided to the tracing office to enable the firm to provide that information or documentation to another tracing office or to make it available itself; and
(d) send to the tracing office its FSA Firm Reference Number.

06/03/2011

ICOBS 8.4.8

For the purposes of ICOBS 8.4.4R (2)(d) and ICOBS 8.4.7R (1)(a)(ii) the existence of published and up-to-date versions of both a certificate from the directors of the tracing office, stating that the tracing office has complied in all material respects with the requirements in ICOBS 8.4.9R (1) to (6), and an independent assurance report, addressing the accuracy and completeness of the tracing office's database, may be relied upon as tending to establish that a firm has satisfied the requirement to use a tracing office which meets the conditions in ICOBS 8.4.9R (1) to (6).

06/03/2011

Qualifying tracing offices

ICOBS 8.4.9

The conditions referred to in ICOBS 8.4.4R (2)(d) and ICOBS 8.4.7R (1)(a)(ii) are that the tracing office is one which:

(1) maintains a database which:

(a) accurately and reliably stores information submitted to it by firms for the purposes of complying with these rules;
(b) has systems which can adequately keep it up to date in the light of new information provided by firms;
(c) has an effective search function which allows a person inputting data included on the database relating to a particular employer over a particular period to retrieve information on the database relating to a potential employers' liability claim corresponding to that employer and period;

(2) maintains adequate records of the director's certificates and independent assurance reports sent to it by firms for the purposes of complying with these rules;
(3) has effective arrangements for information security, information back up and business continuity and to prevent the misuse of data;
(4) accepts search requests in relation to information in (1) relating to a potential claim from:

(a) individuals with the potential claim, or their authorised representative; or
(b) the employer to whom the potential claim relates; or
(c) an insurer which is potentially jointly and severally liable with another firm in relation to the potential claim; or
(d) a relevant insurance intermediary acting for an insurer in (c);

(5) provides responses to requests in (4) without delay;
(6) has adequate arrangements for providing to a firm, upon request and without delay, a full copy of the information on the database that the firm has provided to it;
(7) includes in its published annual report:

(a) a certificate from the directors of the tracing office stating whether the tracing office has complied with the requirements in (1) to (6) in relation to the period covered by the annual report; and
(b) an independent assurance report addressing the accuracy and completeness of the database, prepared by an auditor satisfying the requirements of SUP 3.4 and SUP 3.8.5 R to SUP 3.8.6 R, and addressed to the directors of the tracing office; and

(8) provides to a firm making use of the tracing office for the purposes of ICOBS 8.4.7R (1)(a)(ii):

(a) a copy of its annual report promptly after publication; and
(b) upon request and without delay a full copy of the information on the database that the firm has provided to it.

06/03/2011

ICOBS 8.4.10

(1) ICOBS 8.4.4R (2)(b) and ICOBS 8.4.9R (1) require a firm, or a tracing office used by a firm, to have an effective search function in relation to the employers' liability register database. In the FSA's view an effective search function is one which finds all matches in the register to any specified whole word.
(2) For the purposes of ICOBS 8.4.9R (5) the term 'without delay' should have the same meaning as in ICOBS 8.4.5G (2).
(3) In order to assist firms with their obligations under these rules the FSA has agreed to publish on its website at http://www.fsa.gov.uk/Pages/consumerinformation/product_news/insurance/employers_liability/index.shtml a list of persons providing tracing office facilities which have published the directors' certificate and independent assurance report referred to in ICOBS 8.4.9R (7).

06/03/2011

Updating and verification requirements

ICOBS 8.4.11

(1) A firm must notify the FSA:

(a) of any information provided to the FSA under ICOBS 8.4.6 R which ceases to be true or accurate; and
(b) of the new position, in accordance with the notification requirements in ICOBS 8.4.6 R;

within one month of the change.
(2) A firm producing an employers' liability register must:

(a) update the register with any new or more accurate information falling within ICOBS 8 Annex 1:

(i) by virtue of the entry into or renewal of, or of a claim made in relation to, a policy, as required by ICOBS 8 Annex 1 Part 1; and
(ii) in all other cases, by virtue of the firm having received that new or more accurate information;

(b) make the updated information in (a) available, in accordance with ICOBS 8.4.7 R, no later than:

(i) in relation to new or more accurate information arising out of the entry into or renewal of, or a claim made in relation to, a policy, three months from the date of entry, renewal or the date upon which the claim was made; and
(ii) in all other cases, three months from the date upon which the firm received the new or more accurate information;

(c) update the register, no less frequently than once every three months, and include the date that the register was updated and a statement that the register may be relied on as up-to-date as at a date three months prior to the date upon which the register was updated, or such later date as applicable to the firm;
(d) obtain a director's certificate:

(i) no later than twelve months after the date of the most recent director's certificate, obtained in accordance with ICOBS 8.4.4R (1)(b) or this rule;
(ii) complying with the requirements, and containing the statement, set out in ICOBS 8.4.4R (1)(b); and
(iii) in relation to a version of the employers' liability register dated no more than three months prior to the date of the director's certificate;

(e) obtain an independent assurance report:

(i) no later than twelve months after the date of the most recent independent assurance report, obtained in accordance with ICOBS 8.4.4R (1)(c) or this rule;
(ii) complying with the requirements, and containing the statement, set out in ICOBS 8.4.4R (1)(c); and
(iii) in relation to a version of the employers' liability register dated no more than three months prior to the date of the assurance report; and

(f) make available, in accordance with ICOBS 8.4.7 R, the director's statement in (d) and the independent assurance report in (e) no later than 3 months after the effective date of the version of the register to which they relate, in place of the previous certificate and report.

06/03/2011

ICOBS 8.4.12

For the purposes of ICOBS 8.4.11R (2)(c) a firm is required to include the date at which it updates the register. However, depending on the firm's processes for making information available for the purposes of ICOBS 8.4.11R (2)(b), the register may only be relied upon as being up-to-date as at a date three months prior to the date on which the firm has updated the register, or such lesser period as applicable to the firm as is consistent with the firm's processes. ICOBS 8.4.11R (2)(c) requires the firm to include a statement as to the date at which the register may be relied upon as containing up-to-date information which can be no earlier than three months prior to the new date on the register, but may be later depending on the firm's circumstances.

06/03/2011

Transfers of insurance business

ICOBS 8.4.13

The transferor in an insurance business transfer scheme must provide the transferee with the information and documents the transferor holds in compliance with ICOBS 8.4 in respect of the insurance business transferred.

06/03/2011

ICOBS 8 Annex 1

Employers' liability register

06/03/2011

See ICOBS 8.4.4R (1)(a).

Part 1 In relation to information to be included in the employers' liability register

1.1

A firm must:

(1)

for each policy it enters into or renews on or after 1 April 2011, include, in relation to that policy, all the information required by the form in 1.2R, in accordance with the notes;

(2)

for each policy not falling in (1) and in relation to which a claim is made on or after 1 April 2011, include, in relation to that policy, all the information required by the form in 1.2R that the firm holds, in accordance with the notes; and

(3)

in relation to (1) and (2) include the notes set out in 1.2R.

1.2

FORM

Part 2 In relation to information not required to be included

2.1

A firm carrying out contracts of insurance, in relation to which information is not required to be included in the register under FSA rules, must, beneath the form in 1.2R, state the following, where applicable, tailored as necessary to the firm's circumstances:

"We have potential liability for policies under which UK commercial lines employers' liability cover has been provided to employers and which commenced or were renewed before 1 April 2011 and in respect of which no claims were made on or after 1 April 2011. However, we are not required to make details of those policies available in this register under FSA rules. Enquiries may be made about these policies by individual claimants, their authorised representatives, or insurers or their insurance intermediaries, with potential claims, by contacting [insert contact details]"

2.2

The purpose of 2.1R is to inform users of the register that the firm may be potentially liable in relation to policies other than those on the register. However, a firm may include policies additional to those entered into, renewed, or in relation to which a claim was made, after April 2011, in the register. If it does, the statement in 2.1R may be amended as necessary to refer to the policies that are not included.

06/03/2011