General insurance broking sits at the intersection of the FCA’s Insurance Conduct of Business Sourcebook (ICOBS), the Consumer Duty, and the firm-specific obligations that come with holding insurance distribution permissions. For brokers across personal and commercial lines, knowing how these fit together and being able to evidence it in practice is central to staying authorised.
This article covers the essentials: the core ICOBS framework, the advised versus non-advised distinction, demands and needs documentation, renewal obligations, and how Consumer Duty has reshaped what “good practice” looks like.
The ICOBS Framework
ICOBS is the FCA Handbook sourcebook governing how firms distribute non-investment insurance — general insurance products such as motor, property, liability and travel, alongside pure protection products like term life and critical illness cover. Its core purpose is to ensure customers are treated fairly: brokers must give clear, fair information, ensure any advice given is suitable, and take reasonable steps to provide appropriate information about a policy in good time and in a comprehensible way, before and after the sale, including on price.
ICOBS is organised into a series of chapters that map closely onto the customer journey: ICOBS 2 sets out the duty to act honestly, fairly and professionally in the customer’s best interests; ICOBS 4 requires status disclosure; ICOBS 5 covers demands and needs; ICOBS 6 covers product information, including the Insurance Product Information Document (IPID); ICOBS 6A deals with product value and renewals; ICOBS 7 sets out cancellation rights; and ICOBS 8 governs claims handling. ICOBS historically implemented the Insurance Distribution Directive (IDD), which was repealed in UK law on 5 April 2024 — the substance of the rules has been retained as the FCA’s own domestic rulebook, so day-to-day obligations haven’t changed, but documentation should no longer reference the IDD by name.
Advised vs Non-Advised: Know Which Process You’re Running
One of the most fundamental decisions a general insurance broker makes for every sale is whether the process is advised or non-advised, and this needs to be consistent, documented, and understood by every staff member involved in sales.
In an advised sale, the broker makes a personal recommendation based on the customer’s demands and needs and takes responsibility for its suitability; the file must evidence why the recommended policy fits that customer’s circumstances. In a non-advised sale, the broker still has to identify the customer’s demands and needs and ensure the policy offered is consistent with them, without making a personal recommendation. Note, ICOBS 5 still requires this, even though no formal “advice” is given.
Confusion between the two models is a common gap the FCA finds at supervisory visits: staff describing the process as non-advised on paper while their actual conversations stray into recommending specific products. Firms should have a written sales process for each line of business such as commercial and personal lines often warrant separate procedures and should train and monitor staff against it consistently.
Demands and Needs: More Than a Form
The demands and needs statement is one of the most scrutinised documents in a general insurance file. It’s the evidence that the customer has been sold, or advised to buy, a policy that actually fits their situation. For personal lines this is often a short, templated process; for commercial lines the FCA expects depth proportionate to the complexity of the risk. A demands and needs statement that looks identical across dissimilar commercial clients is a clear warning sign that the assessment is being completed as an afterthought rather than during the conversation itself.
Good documentation is specific to the individual customer’s stated circumstances rather than generic boilerplate; is completed contemporaneously with the sales conversation; is revisited at renewal and on any mid-term adjustment, since needs can change; and cross-references the policy features being offered. This matters most when something goes wrong: if a customer later suffers an uninsured loss, the first thing the Financial Ombudsman Service or the FCA will check is whether adequate needs analysis was carried out at the point of sale.
Renewals: Prescribed Requirements
Renewals carry their own obligations under ICOBS 6 and ICOBS 6A, and the FCA has been explicit that the appropriate information rule applies at renewal just as much as at new business. For consumer policies of ten months or more, firms must disclose the previous year’s premium so the customer can genuinely compare last year’s price with this year’s, and must follow the FCA’s prescribed wording on shopping around where applicable.
Other points to build into the process: auto-renewal terms must be clearly flagged rather than buried; mid-term adjustments from the previous policy year must be reflected appropriately in the renewal premium presented; instalment customers need the relevant credit-specific disclosures alongside the insurance ones; and cancellation rights still apply once a policy has renewed. Firms relying on template renewal letters should also check that the demands and needs position is reconfirmed, not assumed unchanged from the prior year as circumstances shift, particularly in commercial lines.
Consumer Duty: The Overlay That Changes Everything
The Consumer Duty applies to all products and services sold or renewed by retail-facing firms, and for general insurance brokers it operates as an overlay across the whole of ICOBS rather than a separate obligation. The Duty requires firms to evidence good outcomes across four areas: products and services, price and value, consumer understanding, and consumer support. The critical word is “evidence” — a polished policy sitting in a compliance folder proves nothing. Brokers need management information that genuinely tracks outcomes: not just complaints logged, but root cause themes; not just calls answered, but whether customers understood what they were buying and whether cover was adequate.
For general insurance specifically, this has practical consequences for fair value assessments particularly where commission or added-value products form part of the package, for the clarity of IPIDs and renewal communications, and for ensuring customer support is genuinely accessible, including for customers in vulnerable circumstances, where the bar for good outcomes is higher rather than lower.
Building a Compliant Framework
A general insurance broker’s compliance framework should rest on a few clear pillars: a documented advised or non-advised sales process for each line of business; demands and needs assessment that’s genuinely individualised and evidenced; renewal procedures that meet the specific ICOBS and ICOBS 6A disclosure requirements; and a Consumer Duty monitoring framework built around real customer outcomes rather than activity counts.
None of this needs reinventing from scratch. Terms of business, demands and needs statements, renewal letters with the FCA’s required prescribed text, and training and competence manuals tailored to commercial and personal lines can all be built from well-structured templates and adapted to your firm’s business mix, but they need to be properly understood and consistently applied by everyone in the sales process, not simply filed away as evidence that a policy exists.
This article is for informational purposes only and does not constitute legal or compliance advice. Brokers should consult their compliance function or a qualified regulatory adviser for guidance specific to their business.
Written by the Ecompli founder — With over 20 years in financial services and having founded Ecompli in 2006, these blogs are written by a specialist with hands-on expertise in FCA regulation across the mortgage, general insurance, equity release, and insurance claims handling sectors.
