COBS 21.2 Rules for firms engaged in linked long-term insurance business

For the purposes of determining policyholder benefits, a firm must ensure that the values of its permitted links and conditional permitted links are determined fairly and accurately.

An insurer must not contract to provide benefits under linked long-term contracts of insurance that are determined wholly or partly, directly or indirectly, by reference to fluctuations in any index or wholly or partly by reference to the value of, or the income from, or fluctuations in the value of, property other than in accordance with the rules in this section.

A firm must notify its linked policyholders of the risk profile and investment strategy for the linked fund:

1. (1)

   at inception;

2. (2)

   before making any material changes; and

3. (3)

   (in relation to conditional permitted links) at other appropriate times, taking into account a policyholder’s needs.

A firm that has entered into a reinsurance contract in respect of its linked long-term insurance business must nevertheless discharge its responsibilities under its linked long-term insurance contracts, as if no reinsurance contract had been effected.

A firm must notify the FCA in writing as soon as it becomes aware of any failure to meet the requirements of COBS 21, or of the PRA Rulebook Solvency II Firms Investments or the PRA Rulebook: Non-Solvency II firm sector to the extent applicable to linked long-term contracts of insurance.