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

JonBoy_SCFC

dacouch wrote: »

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.

i completely agree, which is why i would charge them similar premiums i.e. a customer of mine would not benefit from having protected NCD

as an underwriter did you not generally price to risk?

dacouch

I'm not an underwriter.

The would not charge them the same premium, one has paid to protect one has not.

If you charged the same you could fall foul of TCF big time

JonBoy_SCFC

dacouch wrote: »

I'm not an underwriter.

The would not charge them the same premium, one has paid to protect one has not.

If you charged the same you could fall foul of TCF big time

TCF doesn't come into it - the FSA have said themselves that price is totally seperate of TCF, nothing to do with it. That's another subject don't get me going! The FSA made a big fuss of TCF but bottled it when it came to tackiling the issues that matters the most - cash paid by customers!

JonBoy_SCFC

dacouch wrote: »

I'm not an underwriter.

The would not charge them the same premium, one has paid to protect one has not.

If you charged the same you could fall foul of TCF big time

if you have 2 types of risk that are similar in risk level and an insurer decides to charge them different premiums then you go against all the principles of underwriting. You risk massive anti-selection

dacouch

They are different risks one has 3 years ncd the other has 5 years ncd hence a lower premium. In addition like I said its argueable that the person who has the foresight to pay to protect his no claims bonus would also be a better driver in the same way a business is normally perceived to be a better risk if they have gone to the of having a full and proper health and safety policy in place. They are often better risks as they are cautious to risk and take measures to prevent the additonal costs caused by a claim or incident by spending money to try and prevent it happening

JonBoy_SCFC

you said in a post above that they're similar risks?

i agree about the point that protecting NCD might indicate "safe behaviour" but i'd expect this to be marginal compared to the NCD issue.

dacouch

I meant as in they are at similar risk of having a claim, I did not say they should pay the same premium

JonBoy_SCFC

dacouch wrote: »

I meant as in they are at similar risk of having a claim, I did not say they should pay the same premium

but surely if they're similar risk in terms of claims, then as an insurer you should charge them similar premiums

If you don't some clever insurer will come along and let you take on the one that you're "under-charging in terms of risk having claim", but they themselves will take on the ones that you're "over-charging in terms of claims". you end up only having taken the under-charged business - not good

it's a simple concept of underwriting called anti-selection.


maybe someone who has been an experienced underwriter could comment on tall of this ...

dacouch

Thats a basic principal of business especially Insurance, it has been known for Insurers who spot these gaps in the market to have their fingers burnt when they miss price to gain this business and get their fingers burnt.

JonBoy_SCFC

doing it your way - charging vastly different prices for risks that are very similar is surely the definition of "mis-pricing"

the 2 vastly different prices can't both be right:money: