CIPR 6.4.1 Non-investment insurance contracts — general requirements for retail business

(1) Before an authorised firm sells a non-investment insurance contract to a retail customer:
(a) it must take reasonable steps to ensure that it has information about the customer's personal and financial circumstances (including details of the customer's existing insurance cover) and objectives that might reasonably be expected to be relevant;
(b) it must take reasonable steps to ensure that the contract is suitable for the customer's demands and needs, taking into account:
(i) whether the level of cover is sufficient for the risks that the customer wishes to insure;
(ii) the cost of the contract, if the cost is relevant to the customer's demands and needs; and
(iii) the relevance of any exclusions, excesses, limitations or conditions in the contract; and
(c) it must explain to the customer the customer's duty to disclose all circumstances material to the contract (both before the insurance starts and throughout the term of the contract) and the consequences of any failure to make a disclosure.
(2) The firm must give the customer a statement, in a durable medium, of why the firm considers the contract to be suitable for the customer. The statement must set out the following information:
(a) the customer's demands and needs;
(b) an explanation of why the firm has concluded that the contract is suitable for the customer, taking into account the information provided by the customer;
(c) an explanation of any possible disadvantages that the contract might have for the customer, including the nature of the risks involved.
(3) An authorised firm must establish systems and controls to promote the giving of good advice. In particular, the firm must establish continuous training programs that enable the employees who give advice:
(a) to keep abreast of market trends, economic conditions, innovations and modifications made to the products and services;
(b) to maintain an appropriate level of knowledge about their industry, including the characteristics and risks of the products and services;
(c) to know the applicable legal and regulatory requirements;
(d) to know the requirements for communicating information about the products and services and for appropriately disclosing any situation that is liable to compromise the impartiality of the advice given or limit such advice; and
(e) to be familiar with the documentation about the products and services and to answer reasonably foreseeable questions.
(4) An authorised firm must establish systems and controls to effectively monitor all non-investment insurance advice given by employees in order to ensure the quality and appropriateness of that advice, and to take any necessary remedial measures.
(5) If a retail customer instructs an authorised firm to obtain insurance that is contrary to advice that the firm has given the customer, the firm must obtain confirmation, in a durable medium, of the customer's instructions before arranging or buying the insurance.
Derived from QFCRA RM/2019-2 (as from 1st January 2020).