Selling add-ons: what the rules require when the extra is agreed in a chat

Contents

1. The rule is about an active election, not about disclosure
2. Cross-selling: two directions, two different duties
3. Every insurance component still needs its own demands and needs
4. GAP: the one add-on with a clock attached
5. A six-message pattern that survives a file review
6. Frequently asked questions

A haulage client agrees the fleet renewal in eleven messages on a Tuesday afternoon. Somewhere in the middle the account handler types: "I'll carry legal expenses and excess protection over as usual — that takes it to £4,180." The client sends a thumbs-up, the cover note goes out, and nobody thinks about it again until a file review eighteen months later asks a very simple question: which of those products did the customer actually choose?

Optional extras are the part of a broking sale where the Handbook is at its most literal. Chat is where the literalness gets lost — the price disappears into a total, the choice becomes an assumption, and the file ends up with an emoji where an election should be. The rules have not changed; the medium has just made them easier to fail.

The rule is about an active election, not about disclosure

The operative rule is short. Under ICOBS 6A.2.1R, a firm must not enter into an agreement with a customer under which a charge is, or may become, payable for an optional additional product unless the customer has actively elected to obtain that specific product. The rule spells out that an omission is not an active election, and gives the obvious example: failing to change a default option, such as a pre-ticked box. It came into force on 1 April 2016, after the FCA's general insurance add-ons market study, and it applies to appointed representatives as well as to the firm itself.

Three features of that rule catch brokers out. It applies to customers, not only to consumers — a commercial client's renewal is inside it. It bites wherever a charge "is, or may become, payable", which brings retail premium finance and paid-for extras that are not themselves insurance into scope. And it asks for an election in respect of that specific product, not general assent to a package.

Translated into the messages a brokerage actually sends:

What the handler sends	Does it evidence an active election?	Why
"I'll add legal expenses as usual unless you tell me otherwise."	No	Silence is the omission the rule expressly excludes.
"Renewal is £4,180 all in, same cover as last year."	No	No separate price, no identifiable product, nothing to elect.
"Legal expenses is £96 for the year on top of the £4,084 fleet premium. Reply ADD if you want it."	Yes	Named product, its own price, an affirmative act by the customer.
A template with two quick-reply buttons, "Add legal expenses (£96)" and "No thanks", after the price is shown in the body	Yes	The reply is recorded against the customer and identifies the product.
A thumbs-up reaction to a message bundling two extras at one price	No	Nothing in the record shows which product was chosen, or at what price.

Cross-selling: two directions, two different duties

ICOBS 6A.3 and Article 24 of the Insurance Distribution Directive — the source of the UK rule and the live text for firms in Ireland, the Netherlands, Germany and the rest of the EU — treat packages differently depending on which component is the main event.

Where the insurance is the principal product and something else is bundled with it, the firm must tell the customer whether the components can be bought separately, describe each component and any differences in the cover when it is bought as part of the package rather than on its own, and give separate evidence of the costs and charges of each component. Where the insurance is ancillary to a non-insurance good or service, the duty flips: the firm must offer the customer the option of buying the goods or services separately, subject to narrow exceptions.

"Separate evidence of the costs and charges" is the phrase to write on a whiteboard. It rules out the single figure that most renewal messages contain. In practice it means the extras appear as their own line with their own price, in the message the customer keeps — not only in the policy schedule that arrives later.

Every insurance component still needs its own demands and needs

An add-on that is a contract of insurance carries the full ICOBS 5.2 obligation: the demands and needs must be specified on the basis of information obtained from the customer, and a statement of them must reach the customer before the contract is concluded. A package does not merge four demands-and-needs tests into one; it creates the need to address the package and each insurance component within it. The mechanics of doing that in a thread — and of getting the statement to the client before, not after, cover incepts — are set out in our guide to demands and needs when you sell over WhatsApp.

The commercial temptation runs the other way. Extras are where margin sits, which is exactly why product governance looks at them: a low-claims-frequency add-on with high distribution costs is the classic fair value problem, and the evidence you keep about your own remuneration is a separate discipline covered in what PROD 4 makes brokers evidence on commission. Selling the extra compliantly and pricing it fairly are two tests, and passing one does not excuse the other.

GAP: the one add-on with a clock attached

Guaranteed asset protection has its own regime in ICOBS 6A.1, and it applies where the GAP is sold in connection with the sale of a vehicle by the firm or by a person connected to it. Before the contract can be concluded, the customer must receive prescribed information on paper or another durable medium: the total premium separate from any other price, the significant features, benefits and significant or unusual exclusions, notice that GAP is sold by other distributors, the duration, whether the product is optional or compulsory, when the contract can be concluded, and the date the information was given. Then the deferred opt-in bites — the contract cannot be concluded until at least two clear days have passed, unless the customer initiates conclusion after the first day and confirms they understand the restriction they are waiving.

A broker selling GAP independently of a vehicle sale is outside that timing rule, but not outside the scrutiny. In February 2024 firms accounting for most of the GAP market agreed to pause sales after the FCA raised fair value concerns, and sales resumed from May 2024 on materially lower commission. If a distributor is still placing a product whose value case has not been reworked, the add-on rules are the least of the problem.

A six-message pattern that survives a file review

1. Establish the need before the price. One question about the exposure the extra covers — hired-in plant, uninsured loss recovery, a raised excess — recorded in the thread.
2. Send the core cover on its own line, with its own premium. The customer should be able to say yes to the main policy and nothing else.
3. Send each extra as a separate message with the product name, the annual premium, one line on what it does and one on a significant exclusion, and a link to the summary document.
4. Ask for a reply that names the product. A word, a button, or a sentence — anything that identifies which extra was chosen.
5. Confirm the composition in writing before inception: components, individual prices, total, and the fact that each was optional.
6. File the thread against the client record with the demands-and-needs statement, so the sequence can be reconstructed without anyone's handset.

That is where a system like ORIS earns its place: templates approved by Meta can carry up to three quick-reply buttons, so the election arrives as a recorded inbound message attributed to the campaign rather than as a verbal "yeah, go on"; the whole thread sits against the customer record in a shared inbox instead of a personal phone; and a CSV export puts the sequence in front of a compliance reviewer. It does not sign anything, take payment, or decide whether the add-on is suitable — the adviser does that, and the file has to show it. A short walkthrough is the quickest way to see how the reply is stored against the client. The broader retention logic behind cross-selling and upselling, and a worked example in health cover, sit in our cross-sell use case.

Frequently asked questions

Does the active-election rule apply to commercial clients?

Yes. ICOBS 6A.2.1R refers to a customer, which covers commercial customers as well as consumers, and the section applies to appointed representatives too. The practical difference is not scope but expectation: a corporate client who is used to a single renewal figure will need the components broken out, which is a conversation worth having before renewal season rather than during it.

Is a thumbs-up reaction enough to accept an add-on?

It is weak evidence and gets weaker the more the message contains. The rule asks for an election in respect of a specific product, so a reaction to a message that bundles two extras and one total cannot show which product was chosen or at what price. A one-word reply naming the product, or a quick-reply button carrying the product name, costs the client nothing and answers the question outright.

Do we need a separate demands and needs statement for each add-on?

You need to have specified demands and needs for each contract of insurance, and to communicate a statement of them before conclusion. Firms usually satisfy that with one statement that addresses the package and sets out each insurance component separately, rather than four documents. What does not work is a statement that describes the main policy and treats the extras as detail.

Does the GAP deferred opt-in apply to a broker?

Only where the GAP is sold in connection with the sale of a vehicle by the firm or a connected person. A broker placing GAP some weeks after a client bought a car elsewhere is outside the two-clear-day rule, but is still inside the add-on rules, the product governance regime and the FCA's fair value expectations for the product.

What about extras included at no additional charge?

The active-election rule is triggered where a charge is, or may become, payable, so a genuinely free inclusion is outside it. The cross-selling information duties, the demands-and-needs test and fair value all still apply — and "free" should mean free for the life of the cover, not free until the first renewal.