Category: Group risk regulation · Reviewed by Al Jabbar, Broker · Specialist Risks · Last reviewed 2026-06-10
ICOBS 5 (Identifying client needs and advising) of the FCA Handbook sets out the conduct rules applicable to insurance distributors and insurers in respect of identifying the customer’s demands and needs and offering insurance contracts consistent with those demands and needs. Distributors must propose contracts consistent with the customer’s demands and needs (ICOBS 5.2) and provide the customer with a demands and needs statement (ICOBS 5.3).
Category: Group risk regulation Also known as: ICOBS 5 Implements: IDD Article 20 Related concepts: ICOBS Insurance Conduct of Business Sourcebook, ICOBS 6 product information for non-investment insurance, IDD demands and needs statement
The demands and needs statement is a key IDD deliverable. The distributor must identify the customer’s demands and needs and explain how the recommended contract meets those needs. Where advice is provided the statement must include the basis on which the advice was given. The format may be standardised by product but must be customer-specific.
ICOBS 5 implements Article 20 of the Insurance Distribution Directive (Directive (EU) 2016/97). It applies to all sales of non-investment insurance contracts including group risk and protection. ICOBS 5.2.2R requires that any contract proposed is consistent with the customer’s demands and needs.
Applies to all distribution of non-investment insurance, with limited modifications for large risks and pure reinsurance. The rules require a meaningful exercise — a tick-box demands and needs statement that does not reflect a genuine analysis of the customer’s circumstances does not comply.
A group risk broker engages with an employer client to identify the employer’s objectives (recruitment, retention, replacement of income on long-term absence, control of premium cost). The broker produces a written demands and needs statement explaining how the recommended GIP, group life and group critical illness combination matches those objectives. The statement supports any subsequent FCA review of the file and is shared with the customer.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-10. Next review: 2026-12-10.
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