19.3.1. Non-Investment Insurance Contracts —right to cancel

(1) Subject to COB 19.3</a>.2 and 19.3.3, a Retail Client has a right to cancel a Non-Investment Insurance Contract effected by an Insurer.

(2) This rule does not apply to the following contracts:

1. (a) a Non-Investment Insurance Contract that provides cover for less than 1 month;
2. (b) a Non-Investment Insurance Contract that has been fully performed by both parties at the Retail Client’s express request before the Client purports to exercise the right to cancel;
3. (c) a Non-Investment Insurance Contract that is a Pure Protection Contract with a term of 6 months or less.

(3) To remove any doubt, a Retail Client has a right to cancel a Non-Investment Insurance Contract when the contract is initially entered into and on each renewal of the contract. Guidance

1 An Insurer may voluntarily provide additional cancellation rights, or rights exercisable during a longer period than allowed under COB 19.3</a>, but, if it does so, these should be on terms similar to those in COB 19.3.

2 For COB 19.3.1 (2) (b):

1. (a) a contract is not fully performed only because an event has happened that allows a claim to be made under the contract; and
2. (b) a contract is fully performed if a claim has been made that leads to the contract being terminated.

3 Cancellation under this part applies only during the initial period of cover. It does not refer to mid-term cancellation that an Insurer may choose to offer its Clients.

4 The cancellation rights described in this part apply to all renewals and not just those where there have been significant changes.

19.3.2. Non-Investment Insurance Contracts—when cancellation right can be exercised

(1) A Retail Client may exercise a cancellation right under COB 19.3.1 in relation to a NonInvestment Insurance Contract only during the cancellation period for the contract.

(2) For a Non-Investment Insurance Contract that is a Pure Protection Contract, the cancellation period:

1. (a) starts on the day the Insurer, or relevant Insurance Intermediary, gives the Retail Client the policy document and information required by COB 11.7.2 (Confirmation of cover); and
2. (b) ends at the end of 30 days after that day.

(3) For a Non-Investment Insurance Contract that is a General Insurance Contract, the cancellation period:

1. (a) starts on the day the Insurer, or relevant Insurance Intermediary, gives the Retail Client the policy document and information required by COB 11.7.2 (Confirmation of cover); and
2. (b) ends at the end of 14 days after that day.

(4) If a Non-Investment Insurance Contract is a mixed contract, that is, it has elements of both a Pure Protection Contract and a General Insurance Contract, subrule (2) applies to the contract and subrule (3) does not apply to the contract.

19.3.3. Non-Investment Insurance Contracts—exercising cancellation right

(1) This rule applies if a Retail Client has a right under COB 19.3.1 to cancel a NonInvestment Insurance Contract effected by an Insurer.

(2) The Retail Client may exercise the cancellation right by giving notice of the exercise of the right to:

1. (a) the Insurer; or
2. (b) any agent of the Insurer with authority to accept notice for the firm.

(3) Without limiting subrule (2), if the Retail Client exercises the right in accordance with information given to the Client in accordance with COB 11.7.2 (Confirmation of cover),the Client is taken to have complied with the subrule.

(4) The notice may be given orally.

(5) The notice need not use any particular form of words and it is sufficient if the intention to exercise the right is reasonably clear from the notice or the notice and the surrounding circumstances.

(6) The notice need not give reasons for the exercise of the right.

(7) If the Retail Client exercises the cancellation right by sending notice to the Authorised Firm at the address given to the Client by the firm for the exercise of the right and the notice is in a durable form accessible to the firm, the notice is taken to have been given to the firm when it is sent to the firm at that address.

19.3.4. Non-Investment Insurance Contracts—consequences of cancellation

(1) This rule applies if a Retail Client exercises a right under COB 19.3.1 to cancel a NonInvestment Insurance Contract effected by an Insurer.

(2) The Contract of Insurance is terminated.

(3) The Insurer must pay to the Retail Client an amount equal to the total of the amounts paid by the Client for the Contract of Insurance.

(4) The amount must be paid to the Retail Client without delay and not later than 21 days

after the day the cancellation right is exercised.

(5) If the Contract of Insurance is a General Insurance Contract, the Retail Client must, if required by the Insurer, pay the firm an amount of no more than the total of:

1. (a) the value of the services the firm actually provided to the Client in relation to the Contract of Insurance; and
2. (b) amounts received, and the value of property or services received, by the Client in relation to the Contract of Insurance.

(6) However, the Insurer may only require the Retail Client to pay an amount under subrule

(5) if:

1. (a) the performance of the Contract of Insurance started before the end of the cancellation period at the Client’s request; and
2. (b) the Insurer can demonstrate that the Client was, under COB 11.7.2 (Confirmation of cover), given details of the amount that the Client may be required to pay if the Client cancelled the contract.

(7) The Insurer must not require the Retail Client to pay an amount under subrule (5) that could be taken to be a penalty or that exceeds the sum of:

1. (a) the costs (other than costs for the cover provided under the insurance policy) actually incurred by the Insurer in relation to the insurance policy; and
2. (b) the cost to the Insurer of the cover actually provided to the Client under the insurance policy. Guidance for COB 19.3.4 (7) and (8)

1 The amount calculated under COB 19.3.4 (7) may include:

1. (a) an amount for the cover provided; and
2. (b) a proportion of the commission paid to another Authorised Firm sufficient to cover that firm’s costs; and
3. (c) a proportion of any fees charged by the Authorised Firm that, when totalled with any commission to be repaid, would be sufficient to cover the firm’s costs.

2 The AFSA would expect the proportion of the Contract of Insurance’s exposure that relates to the time on risk to be a proportional apportionment. But, if there is material unevenness in the incidence of risk, the Insurer could employ a more accurate method, which may result in a lower or higher charge to the Retail Client.

(8) An amount that the Insurer requires the Retail Client to pay under subrule (5) must not take into account or include an amount received, or the value of any property or services received, by the Client in relation to a claim under the insurance policy.

(9) An amount payable by the Retail Client under subrule (5) must be paid to the Insurer without delay and no later than 30 days after the day the Client receives written notice from the firm requiring payment of the amount.

(10) Any amounts payable under this rule are simple contract debts and may be set off against each other.