COB 7.8 COB 7.8 Suitability
Insureror an Insurance Intermediarymust comply with the suitability requirement set out in COB section 3.4 when conducting any Insuranceor Insurance Intermediation Businesswith or for a Retail Clientin respect of Direct Long-Term Insurance.
COB 7.8.2 COB 7.8.2(1) Subject to COB Rule 7.8.3, an
Insureror Insurance Intermediarymust only make a recommendation to a Retail Clientto enter into a Contractof Insurancethat is General Insurancewhere it has taken reasonable steps to ensure that the recommended Contractof Insuranceis suitable in light of the Client'sdemands and needs.(2) The Insureror Insurance Intermediarymust obtain from a Retail Clientsuch information as is necessary to identify the Client'scircumstances and objectives, and consider whether the terms of the particular contract of General Insurancemeet the requirements identified.
COB 7.8.2 GuidanceSimple and easy to understand general insurance products, such as motor insurance, do not require a detailed suitability assessment. However, in other cases, the information which an Insurer or Insurance Intermediary would generally need to have about the Client’s needs and demands, before making a recommendation about a product, include:a. details relating to the purpose for which the Client is seeking to obtain insurance cover (e.g., what risks the Client wishes to cover);b. the Client’s circumstances, including financial, to assess the type of exclusions and level of excess the Client wishes to accept, or is suitable for the particular Client; andc. any other matters relevant to the particular type of insurance product or market.[Added] DFSA RMI259/2019 (Made 1st January 2020). [VER/34/01-20]
COB 7.8.3 COB 7.8.3
Insurerand an Insurance Intermediarymay only recommend to a Clienta contract of General Insurancethat does not meet all the Client'srequirements if it clearly explains to the Client, at the point of making the recommendation, that the contract does not fully meet the Client'srequirements and the differences in the insurance recommended.
COB 7.8.3 Guidance
When deciding what level of explanation is appropriate for a
Clientto whom a contract of insurance that does not fully meet that Client'srequirements is recommended, the Insureror Insurance Intermediaryshould take into consideration the knowledge held by the Clientin relation to the type of insurance in question. The explanation should include sufficient information so that the Client can understand easily the differences between what is recommended and the Client’s requirements, and the advantages and disadvantages of the recommended insurance, including any financial or other risks the Client may face if the recommended policy does not fully meet the Client’s requirements.
Insurance Intermediaryis instructed to obtain insurance which is contrary to the advice that it has given to a Client, the Insurance Intermediarymust obtain from the Clientwritten confirmation of the Client'sinstructions before arranging or buying the relevant insurance.