III IC-103 key terms

The route through which an insurer's products reach customers, such as agents, brokers, banks, or direct online sales. Each channel carries its own cost, control, and customer-reach trade-offs.

A person or firm standing between insurer and customer, selling or advising on policies in return for commission or fees. Examples include agents, brokers, and bancassurance partners.

An agent who represents one insurer, or a named group of insurers, and may not place business with competitors without permission. The insurer usually controls training, branding, and conduct standards.

An adviser or broker who is not contractually tied to a single insurer and can recommend products from across the market. Independence usually brings wider choice but different disclosure duties.

An intermediary permitted to sell products from a limited panel of insurers rather than one or all of them. The panel is defined in advance and its size must be disclosed to customers.

An intermediary who acts for the customer rather than the insurer, placing risks with suitable carriers and often handling claims and renewals. Brokers typically earn commission from the insurer or fees from the client.

The sale of insurance through bank branches, call centres, or banking apps, often alongside loans and savings products. It gives insurers mass reach but raises advice-quality and product-bundling concerns.

Selling insurance without a face-to-face intermediary, using post, telephone, or digital channels to reach customers. It usually lowers acquisition cost but shifts more of the buying decision to the customer.

An insurer that sells mainly through its own staff, websites, or contact centres rather than through external intermediaries. It keeps tighter control of pricing and customer data.

The contract setting out an agent's authority, territory, products, remuneration, and duties to the insurer. It defines what the agent may bind and how disputes over conduct are resolved.

The power given to an intermediary to accept risks and issue cover on the insurer's behalf within stated limits. It speeds placement but requires audits and clear underwriting rules.

An arrangement where the insurer lets an intermediary or third party perform tasks such as underwriting, pricing, or claims handling under agreed limits. The insurer keeps ultimate responsibility for the risk.

A firm that underwrites business on behalf of an insurer, often with its own underwriting staff and systems, in exchange for a share of premium or profit commission. The insurer remains the carrier of record.

Remuneration paid by an insurer to an intermediary, usually a percentage of premium or a fixed fee per policy. It shapes sales incentives and must be disclosed where rules require.

Extra commission paid to an intermediary when agreed targets, such as volume, retention, or loss ratio, are met. It can reward good performance but may create conflicts of interest.

A share of underwriting profit returned to an intermediary or MGA when the business it produces performs better than an agreed threshold. It aligns incentives but needs careful calculation rules.

Friction that arises when two routes to market compete for the same customers or when one undercuts another's pricing. Insurers manage it with pricing rules, segmentation, and clear channel roles.

The blend of distribution routes an insurer uses and the share of business each produces. Managing the mix balances reach, cost, and control across segments and products.

The average expense of winning one new policyholder, including commissions, marketing, and onboarding costs. Comparing it across channels shows which routes deliver growth efficiently.

Selling an additional product to an existing customer, such as adding accident cover to a motor policy. It raises revenue per customer but must not become improper bundling or mis-selling.

Persuading a customer to buy a higher level or larger amount of cover than first requested. It is legitimate when the extra cover meets a genuine need and the cost is explained.

The structured process of gathering a customer's circumstances and objectives before recommending cover. Its record supports suitability and defends against later mis-selling complaints.

The requirement that a recommended product matches the customer's needs, circumstances, and risk appetite. Advisers must document why the chosen cover is appropriate.

The process of verifying a customer's identity, circumstances, and source of funds before selling or accepting a risk. It supports anti-money-laundering controls and accurate underwriting.

Controls that prevent insurance products being used to disguise the origin of criminal money. Measures include identity checks, transaction monitoring, and reporting suspicious activity.

A confidential report filed with the financial intelligence unit when a transaction or customer behaviour suggests possible money laundering or terrorist financing. Staff must not tip off the customer.

Selling a product that does not meet the customer's needs, or doing so through misleading advice or pressure. It leads to redress costs, regulatory sanctions, and reputational damage.

Giving the customer clear information about the product, its costs, the adviser's status, and any commission or conflict before the sale. It supports informed decisions and fair treatment.

A situation where an intermediary's or insurer's own gain could improperly influence the advice or sale. Firms must identify, manage, and disclose such conflicts.

A benefit offered to an intermediary or customer that could encourage a particular sale rather than the best outcome. Rules restrict inducements that impair fair treatment.

The principle that firms must deliver outcomes customers reasonably expect across product design, sales, and claims. Regulators test it through conduct supervision and complaint data.

The documented process for receiving, investigating, and resolving customer complaints within set deadlines. Good handling flags channel problems early and reduces escalation to the regulator.

Compensation or corrective action given to a customer harmed by poor advice, mis-selling, or mishandled claims. It may follow a complaint, an ombudsman decision, or a firm's own review.

A programme to identify affected customers and put right past failures, such as mis-sold products or incorrect charges. It includes root-cause analysis to prevent recurrence.

The steps that bring a new customer or intermediary into the insurer's systems, including identity checks, contract signing, and access setup. Smooth onboarding reduces early drop-off.

The process of finding an insurer willing to accept a risk and agreeing terms, cover, and price. Brokers handle placement for larger or specialised risks.

The defined group of insurers whose products an intermediary is authorised to sell. Panel size and selection affect customer choice and must be explained.

Advice based on a review of all relevant providers available to the adviser, rather than a limited panel. It signals breadth of choice but requires documented market research.

A personal recommendation to a customer about a product or course of action, which creates duties of suitability and record-keeping. It differs from information-only sales.

Agreement given by a customer who understands the product, its cost, and the adviser's status and remuneration. It is the aim of good disclosure before a sale.