Presumably all (smaller) brokers have now read and fully understand details of ICOB 4 and 5 relating to administration and product disclosure.

But have they realised what this means in terms of that useful little money earner, legal expenses insurance?

It is very likely that a new legal expenses policy will have to be effected. It may be with the same provider, or it may be with another one. This means:

  • A new assessment of 'demands and needs' must be undertaken
  • A statement of 'demands and needs' must be provided to the customer
  • The broker will probably have to declare to the customer that he offers only a single legal expenses policy
  • Premiums will have to be quoted separately (on the statement of price)
  • The customer will have to be provided with a policy summary before taking out the policy.
  • This means that inertia selling of motor legal expenses may become a thing of the past.

    Another factor which needs to be considered is when a broker offers an alternative quotation at renewal date. ICOB 5 lays down different conditions between renewal of a policy and taking out a new policy. But again the broker will have to undertake a new assessment of 'demands and needs' and produce another statement of 'demands and needs'.

    As statements of 'demands and needs' must, by definition, be tailored to the individual, it seems impossible for renewals of personal lines products to be produced on a mechanical basis.

    John Portwood

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