Assessing Customer Needs – What does it involve?

The Insurance Distribution Directive (IDD) requires insurance intermediaries to demonstrate the minimum necessary knowledge required for their role across eight core competencies – one of which is ‘assessing customer needs’.

This will typically involve identifying what it is that a customer requires by understanding their current level of insurance knowledge and gathering the relevant information from them.

The FCA wants firms to ensure that customers are offered an insurance policy that is suitable for their needs. A statement of demands and needs must be communicated to the customer before the contract of insurance is finalised. The purpose of demands and needs is to assist the customer in making an informed decision.

Where customers purchase products that do not meet their needs, they may be at risk of harm.

A further consideration under this requirement may be to consider the needs of vulnerable customers, who may be more susceptible to harm where their needs are not being sufficiently met.

Vulnerability is a complex area and it comes in many forms. The four key drivers identified by the FCA are:

  • Health – illnesses or health conditions that impact day-to-day tasks
  • Resilience – low ability to withstand emotional or financial shocks
  • Life events – such as bereavement, job loss, or a relationship breakdown
  • Capability – low knowledge or confidence of financial matters or managing money. May also involve low literacy or digital skills.

Signs to look out for that may indicate vulnerability could include:

  • Customers saying that they “don’t understand” or “can’t pay”
  • Shortness of breath/agitation
  • Requests for information to be repeated (which may suggest a lack of understanding)
  • Late or missed payments

A customer’s vulnerability may be worsened by a customer service experience that is poor, complicated or confusing, so staff training is important – from senior management through to frontline staff. All relevant individuals in an organisation should understand how their role can affect a vulnerable customer.

For learners on the Aviva Development Zone platform, our Course of the Month for October is ‘Assessing Customer Needs’, which explores in more detail:

  • establishing suitability and demands and needs;
  • evaluating a customer’s insurance knowledge; and
  • gathering relevant information from a customer.

If you’re not signed up to the Development Zone, you can visit for a free 14-day trial.

About the author

Lisa joined RWA in 2014 as an e-Learning Assistant and now heads up RWA’s Design and Content Team. Her role as Head of Content and Communications involves managing content creation and curation on the Aviva Development Zone platform and serving as editor of RWA Insight.

Lisa has diverse creative and technical writing experience. She holds a first class honours degree in English and Creative Writing from Swansea University and graduated from Cardiff Metropolitan University with a Distinction in Creative Writing in 2016.

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