What is the reason to have no-claim bonus protected if insurer will ask about claims?

dacouch

Your message is very confusing but the part I can understand is about the claims loading.

For one claim Insurers common apply no loading or a small loading of up to around 15%. The amount they load is the same whether you have protected no claims bonus or not although some Insurers will apply a bigger loading if you have less than maximum no claims bonus as they perceive you to more likely to make further claims than someone who has maximum no claims bonus.

Your arguement about the loading would be valid if Insurers applied a higher load for a claim for a policy holder who had protected no claims bonus than someone who did not. If they did it would be all over the media with complaints. In addition Insurers are very heavily regulated by the Financial Services Authority, they have a very strict rule called Treating Customers Fairly, this does what it says on the tin, Insurers must treat customers fairly and a higher premium load for customers who had paid extra to protect their no claims bonus would fall foul of this and result in the wrath of the FSA.

If you look at Scotsman4th's example (Which is actually fairly accurate as the amount of no claims discount they would be allowing would normally be around 65% and not normally 50%) then if you factored in the a load of say 10% for a claim then the savings for the policy holder with protected bonus would be around another 10% over the person who had not taken protected no claims bonus.

If you also bear in mind what would happen if there were two claims in one year the savings for the person with protected no claims bonus over the person without protected no claims bonus would be even greater.

Once again Insurers do put a higher load for claims on clients with protected no claims bonus over clients without protected no claims bonus. If you do find a company that does this then try reporting it to the FSA as I believe they would take a dim view of this.

If you pay to protect your no claims bonus you do not lose your no claims bonus if you have a claim or two (Normally 2 claims in a 3 year period then you lose your protected no claims bonus). You can however attract a loading for having claims as the Insurers perceive you to be a higher risk of having further claims (This is backed up by statistical data)

Rolandtheroadie

JonBoy_SCFC wrote: »

correct me if i'm wrong, but i don't think anyone is answering the point the OP is making!


For example, suppose i had a full NCD discount of say 50% and had a claim

Then the insurer could do one of the following for next years premium which is at say £500 before NCD & claims taken into account:
-If NCD not protected: lose NCD discount, but do not rate on claim. So premium is £500 (i.e. no 50% discount for NCD as i lost it)
-If NCD is protected: keep NCD discount, premium reduced to £250, but suffer a 100% increase with respect to claims so premium is again £500

so no difference in premium even though you paid for NCD protection, and you kept your "50% discount":rolleyes:

This is why i am asking the question: What is the point?

Ok, premiums £500 before claims and NCD.
Not protected NCD AND a claim means its 100% up so £1000. (the 100% is just a figure you used, I have no idea how much it would go up).
Protected NCD. Premium £500 up to £1000 due to claim, discounted to £500 as you still have 50% NCD.

I dont get the do not rate on claim bit. Do you mean they just let you off with a claim?

If i have 1 blame claim, I lose 2 years NCD. another one would lose me another 2 years NCD and a third claim would lose me it all. If I also factor in the insurance increases, I'd rather not take the hit twice so to speak (rising premium AND no NCD)

JonBoy_SCFC

scotsman4th wrote: »

I dont get the do not rate on claim bit. Do you mean they just let you off with a claim?

it's not so much that they let you off with the claim - you pay for the claim "via losing NCB", but what difference doies it make how you pay?

you agreed earlier that a driver with full NCB is the same risk after having a claim, regardless of whether they protected NCB

Ask yourself then why an insurer would charge a different premium for the same risk. doesn't make sense!

they kid you into thinking that you keep an NCD discount, when they just increase your premium through the back door using "claims increase" as an excuse:money:

dacouch

Your protecting your no claims discount so you keep your no claims discount you are not insuring yourself against receiving a load for having a claim. Although just one claim many Insurers would ignore anyway .

JonBoy_SCFC

dacouch wrote: »

Your protecting your no claims discount so you keep your no claims discount you are not insuring yourself against receiving a load for having a claim.

totally agree. the argument is about whether it;s worth paying to protect your NCD. i don't think it is given that insurers have the freedom to increase your price by as much as they want "due to claims" anyway

the whole value of having NCD from a customers point of view is that they view it as helping you in terms of premium paid after a claim. if it doesn't do that, then it's worthless to me!

dacouch

It does keep your premium down after a claim...

I have never met anyone in the industry that thinks protected bonus is a con and I can tell you brokers are the biggest sceptics and wingers going. For the average policyholder who has a claim every 7.5 years or whatever it is they would normaly save a bit of money and most importantly have peace of mind because thats what they are getting. Policy holders also see having their no claims bonus protected as being a badge of honour of how good a driver they are.

You could argue that for someone who makes a claim every 15 years or so they will pay more protecting their no claims bonus that it would save them. But they have peace of mind which is what insurance is for. Thats why they take comprehensive rather than third party only so they can sleep at night without worrying what if

JonBoy_SCFC

as an underwriter would you charge the following customers the same premium or different?

Customer A: NCB=5 claim in last year but NCB was protected
Customer B: NCB=3 claim in last year but NCB was not protected

I'd charge them the same. If you'd charge them a different premium i'd be interested to know why

thanks

dacouch

JonBoy_SCFC wrote: »

as an underwriter would you charge the following customers the same premium or different?

Customer A: NCB=5 claim in last year but NCB was protected
Customer B: NCB=3 claim in last year but NCB was not protected

I'd charge them the same. If you'd charge them a different premium i'd be interested to know why

thanks

Simple reason 50% ncd of a gross premium of circa 1000 and 65% off a gross premium of circa 65% (Obviously subject to all other underwriting discounts). As they say in America do the math

JonBoy_SCFC

sorry but i'm not sure if you're not answering the question - which one would you charge the higher premium?

or really, what i should have asked is which one do you think is the higher risk?

dacouch

They are both the same risk although its argueable the person who had the foresight to protect their no claims bonus could be a more cautious and thus better driver.

The person who pays the higher premium is the person without the protected bonus, its simple mathes. Client with 3 years pays circa £500 client with protected pays circa £370 including protected ncd charge. So client with protected bonus saves approx £130 that year and approx £30 the following year