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United Kingdom
United Kingdom
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Demands and needs statement meaning
Published by a LexisNexis Financial Services expert
What does Demands and needs statement mean?
A demands and needs statement is the written record given to an insurance customer that identifies their insurance requirements and confirms how the proposed policy is consistent with those requirements. In legal practice, firms arranging or recommending insurance (for example after-the-event legal expenses insurance or title indemnity) must provide this before the contract is concluded.
In the UK, the obligation arises from the FCA’s Insurance: conduct of Business Sourcebook (ICOBS), which implements the Insurance Distribution Directive, and is mirrored for exempt professional firms in the SRA Financial Services (Conduct of Business) rules under the SRA Standards and Regulations. It is a regulatory (not statutory) concept.
Typical features:
- Non‑advised sale: the statement must set out the client’s demands and needs and the basis on which the product was selected.
- Advised sale: it must also include a personalised explanation of why the recommendation meets those demands and needs (often combined with a suitability statement).
Usage is consistent across England & Wales, Scotland and Northern Ireland under FCA rules. In Ireland, equivalent requirements apply under the European Union (Insurance Distribution) Regulations 2018 and the Central Bank of Ireland’s Consumer Protection Code. The document evidences compliance, supports client understanding, and is important for audit,...
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View the related Practice Notes about Demands and needs statement
PRACTICE NOTES
UK insurance distribution: IDD transposition, post‑Brexit framework, FCA Handbook transfer, regulatory perimeter and connected contracts exclusion, conduct, POG, IPID, IBIPs, complaints, client money and sanctions
This Practice Note outlines how the UK has given effect to the Insurance Distribution Directive (Directive (EU) 2016/97) (IDD), setting out the core components of the UK insurance distribution framework, with links to UK legislation, rules and guidance, and noting reforms made since the UK’s withdrawal from the EU. For information on the EU IDD, including its background and objectives, see Practice Note: EU IDD—essentials. IDD—implementation in the UK EU Member States were required to transpose the IDD into domestic law by 1 July 2018, with the rules taking effect from 1 October 2018. To implement the IDD in the UK, the Financial Conduct Authority (FCA) issued three dedicated consultation papers, three corresponding policy statements and a Handbook Notice. The relevant papers are: March 2017, FCA Consultation Paper ‘Insurance Distribution Directive Implementation—Consultation Paper I’ 17/7 (CP17/7) July 2017, FCA Consultation Paper ‘Insurance Distribution Directive Implementation—Consultation Paper 2’ 17/23 (CP17/23) September 2017, FCA Consultation Paper ‘Insurance Distribution Directive-Consultation Paper 3’ 17/33 (CP17/33) September...
22 May
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View the related Precedents about Demands and needs statement
PRECEDENTS
Template letter: lender’s solicitors recommending property/title insurance with demands-and-needs statement, fees/commission, broker/insurer options and regulatory/complaints disclosures (England and Wales)
Dear [ insert name ], [ insert details of property and lender’s reference ] At this point in your matter, we consider it prudent and in your best interests for [ insert name of borrower ] (the ‘Borrower’) to obtain [ insert type of insurance—eg defective title ] in respect of [ insert description of the property ] (the ‘Property’). You will benefit from this cover because [ describe how lender benefits—eg under the standard terms, as co-insured etc. ]. This is something we have already discussed, and you have confirmed that the Borrower will arrange the insurance accordingly. The Borrower will purchase the policy from [ state name of insurance provider ] [ and you have authorised us to disclose relevant personal data and information to them for this purpose ]. [ Name of firm acting for lender ] will not be involved in arranging the policy. [ Name of firm ] act on behalf of the Borrower (the ‘Borrower’s Solicitors’). Any statements in this correspondence that refer...
22 May
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