Demands and Needs Statement

A demands and needs statement records what a client wants and needs from an insurance contract, and is what the firm communicates to the client before the contract is concluded. In the UK it sits in ICOBS 5.2 of the FCA Handbook. The concept goes back to the EU Insurance Distribution Directive (IDD), so EU countries have equivalent rules.

What is a demands and needs statement?

A demands and needs statement sets out what a client wants to insure and what matters to them, for example a low premium or a high level of cover. In the FCA Handbook, ICOBS 5.2.2R says that before a contract is concluded the firm specifies the customer's demands and needs “on the basis of information obtained from the customer”, and that the detail is “modulated according to the complexity” of the contract. ICOBS 5.2.2BR adds that the contract proposed must be “consistent with the customer's insurance demands and needs”.

The concept goes back to the EU Insurance Distribution Directive (IDD). EU countries have equivalent rules in their own national law, so brokers with clients there should look at those too.

What goes into a demands and needs statement?

The Handbook sets the frame. In practice a few more details help you retrace the conversation later:

• Demands and needs: what the client wants to protect and what matters to them, based on the information they gave you.
• The contract proposed: which product or change you suggest and how it matches those demands and needs.
• Context: date, who took part, the alternatives you discussed and the information the client was given.

How much detail it needs depends on the contract and the client. A straightforward motor renewal needs less than income protection.

In what form does the client get it?

ICOBS 5.2.2R also says the statement must be “communicated to the customer prior to the conclusion of a contract of insurance”. ICOBS 5.2.4G, which applies where no personal recommendation is given, says the format is flexible. ICOBS 5.2.5R ties the communication to ICOBS 4.1A, which lists paper, “a durable medium other than paper” or a website that meets certain conditions.

Whether a particular channel, such as a WhatsApp message, counts as a durable medium is a question for your compliance consultant.

Why does it matter?

Because it shows what the conversation was about and what you proposed on that basis. If a client later questions the advice, a clear record helps everyone retrace what was said.

It is also a working tool. Whoever takes over the client at the annual review sees at once what was discussed last time. Many brokerages therefore write it in their broker management system or from a fixed template.

Does a chat replace the statement?

Not by itself. The chat holds information obtained from the client. The statement is what the firm produces from it. The chat history is the supporting record next to the statement: it shows what the client asked and sent, what you replied and when. To reach the client file, it has to leave the phone. Our article on WhatsApp records for insurance brokers shows how.

Whether your process meets the requirements is a question for your compliance consultant. Health details do not belong in the chat in any case, see health data.

How does SendSeven support the records?

SendSeven brings WhatsApp and the other channels into one team inbox. Opt-ins and chat histories are documented with date and time:

• Consent: for every opt-in, SendSeven stores since when it exists and how it came about.
• Transcript: download any conversation as a PDF or ZIP, with photos, files and the names of all senders. It can be created automatically when you close the conversation.
• Hand-over: a webhook reports each finished transcript. From there n8n, Make or Zapier can pass it on to your archive.

SendSeven is hosted in the EU (Frankfurt), and chat histories are kept with no time limit on every plan with the team inbox. Which retention periods apply to your records is something to agree with your compliance consultant. More about the solution for brokerages on the insurance industry page.

Practical example

Claire Whitmore asks on WhatsApp whether she should move her motor insurance at renewal and sends a photo of her current policy schedule. Daniel Ellery goes through what matters to her by phone and recommends a policy with an approved repairer network, because she wants to bring the premium down.

He writes the demands and needs statement in the broker management system as usual and emails it to her as a PDF. He closes the chat in the team inbox. SendSeven creates the transcript with the photo of her policy schedule, and it goes into the client file next to the statement.

This is general information, not legal advice. Check the details with your compliance consultant.