QUESTION: I'm not sure what is expected of me in respect of demands and needs. Can you please explain?

ANSWER: Sections 4.3 and 4.4 of the Insurance Conduct of Business (ICOB) rules outline the requirements, which can be
broken down as follows:

1. Identify needs - you must:

- Ask the customer what his requirements are

- Collect all the relevant information

- Check if you already hold details about the customer

- Ask about any relevant existing insurance

- Explain to the customer what he needs to disclose

- Take into account all the relevant facts disclosed by the customer.

2. Ensure suitability - in assessing whether a particular contract is suitable to meet the customer's demands and needs, you must take into account whether the level of cover is sufficient and the relevance of any exclusions, excesses, limitations or conditions in the contract.

3. Making a personal recommendation - you must take reasonable steps to ensure that if you make a personal recommendation to a customer, the contract recommended is suitable for the customer's demands and needs.

4. Demands and needs statement - this must be given before the contract is concluded. It must be in a durable medium - in writing or email. For telephone sales, the information can be given verbally and then confirmed in writing as soon as the contract is concluded. The statement must include:

- A statement of the customer's demands and needs

- A statement on whether a personal recommendation has been made or not

- If a personal recommendation has been given, a statement explaining the reasons why.

It is more than likely that for system-driven business such as motor and household insurance, the leading software providers will automate the demands and needs statement, albeit with some free text for the 'reasons why' statement.

- Steve White is regulation and compliance manager at Biba