The Connected Contract Exemption: What It Actually Means for Retailers Who Want to Sell Insurance

The Connected Contract Exemption lets UK retailers offer insurance at checkout without FCA authorisation. If your business sells products worth protecting and you have assumed you need to become FCA-authorised to offer insurance – you are probably wrong. Article 72B of the Regulated Activities Order (RAO) creates an exemption that most retailers do not know exists. It allows businesses to distribute insurance products that are complementary to the goods or services they sell, without direct FCA authorisation. This is not a loophole. It is the regulatory route designed specifically for businesses like yours. Here is what it actually means for retailers considering embedded insurance.

The Connected Contract Exemption is a provision in UK financial regulation that allows businesses to distribute insurance products without becoming FCA-authorised — provided the insurance is complementary to the goods or services they sell. Under the Connected Contract Exemption, a retailer selling power tools can offer accidental damage protection at checkout. A membership organisation can offer professional indemnity insurance to its members. A trade platform can offer tool insurance to tradespeople.

The exemption exists because the FCA recognises that certain insurance products are a natural extension of an existing commercial relationship. The customer is already buying something. The insurance protects that purchase. The retailer is not operating as an insurance broker — they are offering a relevant, complementary product at the moment it makes sense. This is the legal foundation that allows embedded insurance for retailers to exist.

The CCE is not available to every business. Three conditions must be met:

1. The insurance must be complementary to the goods or services sold. The insurance product must relate directly to what the customer is buying. A retailer selling bicycles can offer bicycle theft insurance. A trade merchant selling power tools can offer accidental damage cover. A membership organisation can offer professional indemnity insurance relevant to its members’ work. What does not qualify: offering unrelated insurance products, such as travel insurance at a hardware checkout, or life insurance through an ecommerce store selling electronics.
2. The insurance premium must not exceed certain thresholds. Under the current rules, the total annual premium for the insurance product must not exceed €600 (or a pro-rata amount for policies shorter than one year). For most retail protection products — accidental damage, extended warranty, theft cover — this threshold is comfortably met.
3. The retailer must not hold themselves out as an insurance intermediary. The retailer is distributing insurance as part of their commercial offering, not positioning themselves as an insurance broker. This distinction matters. The CCE covers retailers embedding insurance into their existing customer journey — not retailers pivoting to become insurance businesses. Most UK ecommerce retailers, trade platforms, and membership organisations selling products or services worth protecting will meet these conditions.

• Offer insurance at checkout as part of the purchase journey
• Collect premiums on behalf of the insurer
• Provide product information to customers, including coverage details, terms, and pricing
• Generate commission income from policies sold through their platform
• Launch embedded insurance products without applying to the FCA

This is a genuine commercial opportunity. Retailers using the CCE can add a new margin-accretive revenue stream without regulatory overhead, new staff, or specialist insurance expertise. What makes this work is partnership with a regulated infrastructure provider. Quotall holds FCA authorisation and underwrites the compliance, product design, and claims management on behalf of the retailer. The retailer offers insurance at checkout. Quotall’s platform handles everything else.

The Connected Contract Exemption has limits. Understanding them prevents compliance issues later. The CCE does not cover:

• Insurance products that are not complementary to the goods or services sold. You cannot use the CCE to distribute general insurance products unrelated to your core business.
• Advice-based selling. If the insurance requires personal advice – assessing the customer’s individual circumstances and recommending a specific product – the CCE does not apply. The exemption covers distribution at point of sale, not advised sales.
• Regulated insurance mediation beyond distribution. The CCE allows retailers to distribute insurance and collect premiums. It does not cover activities like claims handling, adjusting, or loss assessment – those remain with the insurer or principal firm.
• High-premium products exceeding the threshold. Products with annual premiums above €600 fall outside the CCE. Most retail protection products are well within this limit, but complex or high-value coverage may require the Appointed Representative route instead.

If your business model involves any of these activities, the CCE alone may not be sufficient. The Appointed Representative route offers an alternative.

For retailers whose requirements fall outside the CCE — or who want to offer a broader range of insurance products — the Appointed Representative (AR) route provides an alternative pathway.

Under the AR route, a retailer operates under the regulatory umbrella of an FCA-authorised principal firm. The principal firm holds responsibility for the retailer’s compliance, supervision, and conduct. The retailer can distribute regulated insurance products without direct FCA authorisation, with the principal firm managing the regulatory relationship.

Quotall operates as a principal firm. Retailers who need to go beyond what the CCE allows can become Quotall Appointed Representatives, gaining access to a wider product range while Quotall carries the compliance burden.

The AR route is more involved than the CCE — it requires a formal appointment, ongoing supervision, and compliance monitoring. But for retailers whose products or distribution model exceed CCE limits, it opens the door to embedded insurance that would otherwise require direct FCA authorisation.

For most retailers starting with embedded insurance, the CCE is the faster, simpler route. The AR option exists when needed.

Quotall provides the infrastructure that makes CCE-based embedded insurance practical.

• Product design and underwriting: Quotall works with insurers to create embedded insurance products that fit the retailer’s product range and customer base. The retailer does not need insurance expertise – Quotall handles product design.
• Compliance management: Although the CCE removes the requirement for FCA authorisation, retailers must still meet certain conduct standards. Quotall ensures the product information, disclosures, and sales process meet regulatory requirements.
• Technology integration: Quotall’s platform integrates with ecommerce checkouts, membership platforms, and point-of-sale systems. The insurance offer appears at the right moment in the customer journey, and policy issuance is automated.
• Claims administration: Customers make claims directly to the insurer through Quotall’s claims process, and deal directly with the retailer for repair or replacement. The retailer is not involved in claims handling with the insurer.
• Revenue sharing: Retailers earn commission on every policy sold. The embedded insurance revenue calculator shows what this could mean for your transaction volume. The result: a new revenue stream, live in weeks, with no regulatory complexity and no operational overhead.