Inside the science of the NCD!

lordra

I see so many posts here pertaining to NCD and I realized that we don't really know what makes it beat. So I am going to raise a couple of hypothetical situations and ask questions around it.

1.
Now, kids start driving when they're 17+, correct? Now, until they hit 25, they are going to be paying obscene amounts for insurance unless they earn and protect their NCD.

If a child didn't learn to drive, till, say she turned 20, that's 3 years that everyone else in her age group have been driving (potentially) and have 3 years NCD by then (potentially). So the cost of insuring two different 20 year olds will be vastly different.

What are your views on this?

2.
Now,
a. how do insurance companies keep track of NCD?
b. Why do we need to give them the certificate of NCD? Why can't they just collect it from the previous insurer?
c. How do they then verify this NCD that we have given them from the previous insurer.
d. Is there a national database that they look at?
e. What's the system behind this, because I can't see the big picture as I haven't been asking the right questions.
f. Obviously people can't fake NCDs so how is this monitored? Is it in line with the Data Protection Act?
g. How do insurers keep track of NCDs over the years (eg. a 50 year old driver) with a possible 30 year NCD?

Looking forward to this discussion folks! I know that there are a lot of knowledgeable people there and there are going to be difference in opinions, but I just want an exchange of information!

InsideInsurance

1) Most kids can, disabled kids can start at 16 but cannot take their test until they are 17

Protected their NCD, technically, simply costs more assuming they dont have any accidents.

Not only will you have the different NCD but you will also have the different driving history. However these are still only two of the rating factors used and of cause it depends how good or bad or lucky or unlucky the people have been over those additional 3 years of driving.


2a) Not very well

2b) Some do the "collection" themselves, others dont. Some do it at sale some do it at claims. You can have a DPA issue with the old insurer releasing information to a third party (ie your new insurer)

2c) Generally its just looking at the cert sent. If it looks wrong they'll query it

2d) No, but cross referencing claims history, CUE and the NCD can throw up questions that may result in a referral to counter fraud

2e) There is no system behind this. Insurance is ultimately based on the principles of utmost good faith

2f) Almost all insurance policies have a clause about sharing information. If they prove you gave false information then the policy is voided and the information may be loaded to either CUE and or CIFAS

2g) With difficulty, especially as people often dont understand how NCD works and because there isnt a universal set of rules/ processes


In this day and age NCD is relatively easy to fake and if you know your players its not that hard to get away with it with a little bit of luck. The hope evidently is that the consequences of it being faked, particularly a CIFAS loading for fraud, is sufficient a deterrent for most.

Of cause the other consideration is that around 80% of people have maximum NCD anyway and so have little need to fake things. This has always been the "trick" of eSure, Privilege etc which had marketing materials saying they only accept those with top end NCD as people think that makes it exclusive, thinks that those with bad driving wont be part of their pool etc but in reality the vast majority of people are able to meet their criteria

rs65

lordra wrote: »

If a child didn't learn to drive, till, say she turned 20, that's 3 years that everyone else in her age group have been driving (potentially) and have 3 years NCD by then (potentially). So the cost of insuring two different 20 year olds will be vastly different.

What are your views on this?

So one has 3 years experience and the other has 0 years experience. Why shouldn't the cost be vastly different?

Your hypothetical situation assumes that the one that passed at 17 managed 3 years without a claim.

forgotmyname

So far i have never had an insurance company ask me to supply the NCD proof.
They usually just ask for the previous company and policy number.

Track of 30 years no claims wont usually apply unless you have been with the one company for that long. Some only count 5 years and thats what they may supply. Unless pushed.

When you get your renewal you have the details on how many years you have.

Been a few posts on here where people told them they had more no claims than they really did. It doesnt end well.

Quentin

lordra wrote: »

.
Now, kids start driving when they're 17+, correct? Now, until they hit 25, they are going to be paying obscene amounts for insurance unless they earn and protect their NCD. ......

You usually have to be over 25 to be able to take NCD protection, (and minimum to be able to protect usually 4 years)

lordra

InsideInsurance wrote: »

2a) Not very well
2b) Some do the "collection" themselves, others dont. Some do it at sale some do it at claims. You can have a DPA issue with the old insurer releasing information to a third party (ie your new insurer)
2c) Generally its just looking at the cert sent. If it looks wrong they'll query it

So is there a list of insurers that ask for the NCD upfront and those that ask at claims? I understand about the DPA but surely that should apply to everyone, or no one at all?
You said that they'll query a certificate that looks wrong. What does "looks wrong" mean? You also stated that 2a.They can't keep track very well. So how and who do they query it with?

InsideInsurance wrote: »

2d) No, but cross referencing claims history, CUE and the NCD can throw up questions that may result in a referral to counter fraud

In the case of the 20 year old driver who hasn’t driven for 3 years but has a licence, she’s not going to have a claims history. So how would they verify the 3 years of NCD that she magically produces? What’s CUE?

InsideInsurance wrote: »

2f) Almost all insurance policies have a clause about sharing information. If they prove you gave false information then the policy is voided and the information may be loaded to either CUE and or CIFAS

Is this where the DPA applies and lets them contact the previous insurer directly? Why can’t everyone do this and save us the hassle?

You say it’s easy to be faked. Is this forum a place to discuss such things? A google search gives me results but I would like to discuss how to recognise a fake NCD and how to verify the same.

What does having top end NCD with eSure & Privilege mean? And

InsideInsurance wrote: »

“thinks that those with bad driving wont be part of their pool”

How does this affect the average consumer?:)

forgotmyname

CUE database is shared between insurers and details history of claims etc.

So when you commit fraud and declare having no claims when you dont they all get to know about it.

The ones that as you to supply the details are probably cost cutting.

Its easy to print a sheet off saying you have 5000 years no claims. But its just as easy to get found out.


Are you looking for ways not to get caught or something?

lordra

rs65 wrote: »

So one has 3 years experience and the other has 0 years experience. Why shouldn't the cost be vastly different?

True, I didn't see it like that, I was looking at it as if they were both drivers at the same age. I was only considering the NCD. Not any of the other factors.

lordra

forgotmyname wrote: »

So far i have never had an insurance company ask me to supply the NCD proof. They usually just ask for the previous company and policy number.

But you haven’t given them permission to contact your previous insurer. And shouldn’t you tell your previous insurer that the new one is going to call them and you give them permission to share that information? They can’t just give it out like that.

I can call DirectLine pretending to be Esure and ask about Mr.John Doe’s NCD record. Can’t i?

forgotmyname wrote: »

Track of 30 years no claims wont usually apply unless you have been with the one company for that long.

I’m sure no one is stupid enough to do that! Everywhere on this website, it says to compare every year!

forgotmyname wrote: »

Some only count 5 years and thats what they may supply. Unless pushed.

Good information, as the price comparison sites have drop downs showing 10+ years. So what’s the max NCD an individual can earn?

forgotmyname wrote: »

When you get your renewal you have the details on how many years you have. Been a few posts on here where people told them they had more no claims than they really did. It doesnt end well

What was the process that was followed in order to chase up these potentially NCD fraud people? If, as InsideInsurance said, that there is no way NCD is tracked, no database of sorts, how do they verify it?

InsideInsurance

lordra wrote: »

So is there a list of insurers that ask for the NCD upfront and those that ask at claims? I understand about the DPA but surely that should apply to everyone, or no one at all?
You said that they'll query a certificate that looks wrong. What does "looks wrong" mean? You also stated that 2a.They can't keep track very well. So how and who do they query it with?

There isnt a formal list but undoubtably some create a list, how up to date it may be is questionable as companies change their processes

The problem with most legislation is that it is open to interpretation and so whilst the DPA applies to all companies different companies have different interpretations of how it applies in different circumstances. Likewise different companies have different T&Cs which may or may not include data sharing clauses.

Looks wrong is just that. Insurers may receive thousands of proofs of NCD a month and a lot can come down to simple advisors knowing the weight of paper used or the pantone on logos etc. Basically if something "feels wrong" it'll be investigated further. Add to this the data from CUE and you may trigger a counter fraud referral.

They query elements with each other

lordra wrote: »

In the case of the 20 year old driver who hasn’t driven for 3 years but has a licence, she’s not going to have a claims history. So how would they verify the 3 years of NCD that she magically produces? What’s CUE?

She does have a claims history, three years with no claims assuming she had insurance etc. the NCD is checked in the same way as everyone elses... CUE data, reference to the other insurer(s), staff experience etc

lordra wrote: »

Is this where the DPA applies and lets them contact the previous insurer directly? Why can’t everyone do this and save us the hassle?

Most probably could but not all want to bother. You've already got the sale why do you want to spend an hour of your agents time calling another insurer when you could get the customer to send it for free and spend 1 minute of the agents time checking whats sent?

Are customers really going to switch insurers because last year they had to send proof of NCD and it was a pain? Or are they actually more likely to stay with you even if you are a little more expensive because of the proof of NCD thing being a pain?

Ultimately different companies come up with different answers to these questions and often it is linked to what their proposition is.

lordra wrote: »

You say it’s easy to be faked. Is this forum a place to discuss such things? A google search gives me results but I would like to discuss how to recognise a fake NCD and how to verify the same.

Verification comes from checking with previous insurers. How to recognise comes with experience and the basics are obvious, insurers dont print on rubbish photocopier quality paper, if you look at 100 copies of the logo they'd be identical colour tones, certain insurers have explicit wording when you hit maximum NCD for them others count to 100 years etc

lordra wrote: »

What does having top end NCD with eSure & Privilege mean? And

How does this affect the average consumer?:)

Their proposition is they only insurer people with maximum or near maximum NCD, hence "top end".

The basic concept of insurance is that everyone pays money into a pool (aka the common pool) and as someone has a claim they draw money out of that pool to cover it. Whilst there is sophisticated modelling involved to determine the price people should be paying ultimately speaking if a pool is being depleted heavily by a general rise in claims frequency or cost then everyone that contributes to that pool has to pay more into it to cover future losses (ie premiums go up).

The theory is that if you are in a pool of only good drivers then the pool is less exposed and so you wont get the same premium increases.

InsideInsurance

lordra wrote: »

I can call DirectLine pretending to be Esure and ask about Mr.John Doe’s NCD record. Can’t i?

Potentially and it depends on DL's stance on the DPA and their processes

It MAY be that they only give out information if they recognise the number you're calling from. It may be that they'll only give it out if they call back on the Esure general number. It can be that they wont actually give out any information but simply confirm or deny the number you say is on the proof they sent. It may be they arent willing to discuss it at all over the phone

Again it also depends on what the DL T&Cs said about sharing information.

In many cases, denying or confirming something to be true isnt considered "giving out information" and NCD may or may not be considered "personal information"

As per my post above, the law is not black and white but a continuous shade of grey.