Q&As

What constitutes ‘a personalised explanation’ (of why a particular insurance contract best meets the client’s demands and needs) and can law firms give this explanation in writing only.

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Published on LexisPSL on 13/02/2020

The following Practice Compliance Q&A provides comprehensive and up to date legal information covering:

  • What constitutes ‘a personalised explanation’ (of why a particular insurance contract best meets the client’s demands and needs) and can law firms give this explanation in writing only.

What constitutes ‘a personalised explanation’ (of why a particular insurance contract best meets the client’s demands and needs) and can law firms give this explanation in writing only.

This obligation derives from the SRA COB Rules, r 12.4: ‘where you have given a personal recommendation to the client, you must, in addition to the statement of the demands and needs, provide the client with a personalised explanation of why a particular contract of insurance would best meet the client's demands and needs’.

This obligation reflects the underlying Insurance Distribution Directive (IDD), albeit the terminology is slightly different.

Information to be provided under the IDD/COB Rules (including the personalised explanation), must be communicated to the client:

  1. on paper, via a durable medium or on a website

  2. in a clear and accurate manner, comprehensible to the customer

  3. in an official language of the Member State in which the insured risk is situated or in any other language agreed on by the parties, and

  4. free of charge

See Practice Note: Insurance distribution activities—law firms—How to provide the required information.

Precedent: Letter recommending insurance—demands and needs—law firms contains a prompt

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