Guides / Demands and needs
Demands and needs statement: template and guide
A demands and needs statement records what the client needs, what you recommended and why. Get it right and it is the strongest file note you own when a claim is disputed years later.
What the rules actually require
Under ICOBS, a customer must be given a statement of their demands and needs before the contract is concluded. It has to reflect the complexity of the contract and the information the customer gave you, and it must be clear about whether a personal recommendation was made. That is the substance: what they told you, what that means they need, and what you did about it.
Where you make a personal recommendation, you also have to explain why the contract best meets the demands and needs. A generic paragraph that could belong to any client does not do that. This is general guidance for brokers, not compliance advice — check the current FCA Handbook and your own compliance framework.
What separates a good statement from a weak one
- Specific facts. Trade, turnover, headcount, premises, contract requirements. Anything that drove a limit should appear.
- Reasoning, not labels. "Recommended because the wording does not carry the subcontractor exclusion in the alternative quoted" beats "suitable for your needs".
- Covers declined. Record what you offered and the client turned down, with the date. This is the section that protects you.
- Warranties and conditions precedent. Flag the ones that can void a claim, in plain English.
- Advised or non-advised, stated plainly. Ambiguity here is what complaints turn on.
Free template
Copy this, replace the bracketed fields, and delete the sections that do not apply to the risk.
Statement of demands and needs
STATEMENT OF DEMANDS AND NEEDS Client: [Insured name] Prepared by: [Broker name], [Firm name] Date: [DD/MM/YYYY] Policy: [Class of business / product] 1. What you told us [Insured name] is a [trade / activity] operating from [address(es)], with an estimated annual turnover of [£X] and [N] employees. The business [owns / leases] its premises and holds [stock / plant / vehicles / professional appointments] as described in the presentation of risk dated [DD/MM/YYYY]. 2. The demands and needs we identified On the basis of that information, you require cover for: - [Employers' liability — required by law where you employ staff] - [Public and products liability at £X limit, as required by your contracts] - [Buildings on a reinstatement basis, sum insured £X] - [Contents, stock and business equipment, sums insured £X] - [Business interruption on a [gross profit / revenue] basis, indemnity period X months] - [Add or remove as applicable] 3. What we have recommended and why We recommend the [insurer] [product name] policy because [reason — cover matches the identified needs / limits meet your contractual obligations / the wording does not carry the [X] restriction found in alternatives considered]. This recommendation is [an advised sale — we have made a personal recommendation based on the information you provided] / [made on a non-advised basis — you have selected the cover yourself and we have not made a personal recommendation]. 4. Areas we discussed that are not covered The following were discussed and are NOT included in this policy: - [Cyber / legal expenses / engineering inspection / goods in transit] - [Reason not taken: declined by you on [date] / quoted separately / not required] 5. Significant conditions, warranties and exclusions Your attention is drawn to: - [Minimum security warranty / unoccupancy condition / subjectivity] - [Excess of £X applying to each and every claim] 6. What you need to do - Check that all sums insured remain adequate; underinsurance can reduce a claim. - Tell us immediately if anything in the presentation of risk changes. - Read the policy wording and schedule and confirm they match your understanding. This statement is based solely on the information you have given us. It is not advice on anything outside the cover described above.
Common mistakes
- Issuing the statement after the policy has incepted rather than before conclusion.
- Reusing last year's wording without checking what changed in the business.
- Listing cover that was quoted but never bought, without saying it was declined.
- Describing a personal recommendation while the terms of business say non-advised.
- No mention of sums insured adequacy, then an average clause applies at claim stage.
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