Current fraud with supposed "no-claims bonuses"

DanG_4

Martin has pointed out on this site and it has been also highlighted on TV that car insurers are now penalizing their loyal present customers by offering them renewals at higher premiums than they are offering for new customers, sometimes even though the new customers' claim history may be less clean than that of the comparative existing customers!

However, I have just stumbled upon a much worse abuse which is fraud, and which an evidently increasing number of insurers are now enacting with supposed no-claims bonuses and protected no-claims bonuses. One example is with claims for any windscreen or glass damage. There is a clear statement on most Comprehensive car insurance policies that any claim under the windscreen cover will not affect the insured's no-claims bonus. Of course if the insured has also paid the additional premium to protect their no-claims bonus the promise is that this bonus will not be affected by a claim in any case!

To understand the fraud being perpetrated, we first must take care to understand what "no claims bonus" means. It means that if the insured has no claims in succeeding years their premium will reduce on a scale (the scale varies a little from insurer to insurer) and eventually they may gain the maximum no-claims bonus on the scale. Their premium should then be at the lowest possible level on the scale of premium rates at renewal, if they have not made a claim resulting in their losing that bonus; "protected no-claims bonus" means that this maximum (or existing) bonus will also be maintained even if they have made (usually according to the terms) one claim and they will then not lose that advantage; also the statement "will not affect your no-claims bonus" relative to windscreen or glass damage means exactly that - i.e. the situation of their no-claims bonus will be protected, as if they had a protected no-claims bonus, or had not made any claim. The fundamental problem now is that with insurance premiums going up every year it can be difficult any longer for the insured to know what the premium would have been without the no-claims bonus which they have supposedly earned. Some insurers are cashing in on this doubtfulness, in addition to offering new customers lower premiums; indeed this is one of the ways in which they are now funding the lower premiums to new customers!


What some insurance companies are doing now is deceitfully increasing their offered renewal premium if their insured has made a claim where they have a supposed protected no-claims bonus or where they have had a windscreen repair or replacement, over what the renewal premium would have been if the insurers had not had to pay out for the claim or for a damaged windscreen or window. This is in fact fraudulent, particularly since they are doing this even where the insured has paid the additional premium to supposedly protect their no-claims bonus!! The internet clearly exposes this if an insured gets quotations for each condition and compares the premiums quoted, including that from the insurers they are currently insured with. In other words in effect although these insurers state in their policy terms that a windscreen claim will not affect an insured's no claims bonus and thus the renewal premium, they are not keeping to the stated terms of their own policies, particularly where a no-claims bonus is additionally protected.

I have actually accused one insurer of this when I discovered proof of what they were doing, and they have admitted verbally that they are now doing this. In addition to adopting this trick with existing customers some insurers are also similarly discriminating against new proposers in the same way, even when they have a supposed "protected bonus"! I have collected evidence to show some insurers doing this. This is very serious abuse in insurance, and of the stated offered terms in policies, which are legally binding documents. It is in fact default of contract and fraudulent. It means for example that insurers who do this with motorists who have driven safely for many years and pay an additional premium to supposedly protect their maximum no-claims bonus, but may have the misfortune to have a stone break their windscreen through no fault of their own, are defrauding their customers clandestinely, because these customers have not bothered to check on what is going on!

I discovered that my previous insurers had tried to work this trick on me with their renewal offer, resulting in an increase in my premium of £52 just because I had had a damaged windscreen, although I had a supposedly protected no-claims bonus and over 20 years with no claims! I suspect many other insurers are now pulling this trick and some are clearly doing it with supposed protected no-claims bonuses, which they are therefore not honouring at all! They are perfectly happy to collect the additional premium though! They capitalize upon the annually increasing premiums, and the fact that few of their insured bother to check; so watch out or you may well be cheated by this fraud!

This seems to make it questionable now whether it is worth paying the additional premium to supposedly protect your no-claims bonus?

Iamthesmartestmanalive

This is not fraud

You pay to protect your no claims bonus

Not your premium

I.e its perfectly legal for them to lever a higher policy charge if you claim, as long as they give you the same level of "discount" you were previously entitled too

Its not fraud, its you failing to grasp the service you are paying for

Ali-OK

I think I get where DanG is coming from and if so, I agree with him.

Basically you pay:
Insurance and an additional amount to protect your No Claims Bonus.

You make a claim which would normally affect your no claims bonus on renewal, but because you've paid extra to protect it, should not affect your no claims bonus on renewal. Except when you come to renew, the premium goes up because you advise of a claim when gettng a quote (and you still pay the extra for protecting your no claims bonus), yet if you get quotes without having a claim it's less.

Is that right DanG? If so, this has been going on for years and it's wrong.

FlameCloud

Its actually ok, and is only because the OP doesnt know how insurance works.

You get the No claims discount (say 60%) protected, so even after you make a claim.

To calculate a premium you first need to find out the risk (call that x), and then you apply the discount for the NCD, getting a sum like x-NCD

When you make a claim your base risk increases. You still get the full NCD increase, but becase you have made a claim it is now more like (x+y)- NCD.

It is so far away from Fraud the OP clearly doesnt understand what fraud means.

iceicebaby

As above how flame cloud explains it.

You are still getting the same discount offered by your no claims bonus but this discount is now on a higher base premium due to the increase in risk.

For example

Premium = say £100 and you have 60% NCB so your premium will be £40

Premium the following year as you have made a claim so on the higher risk = £120. you still have your 60% NCB so premium will be £44.

Ali-OK

Thanks for the explanations.

So that means I'm now a higher base risk because someone went into me and it's 100% their fault, but I had to put in a claim to have my car repaired, even though costs and uninsured losses are recovered?

Just interested to understand it all!

mattymoo

Ali-OK wrote: »

Thanks for the explanations.

So that means I'm now a higher base risk because someone went into me and it's 100% their fault, but I had to put in a claim to have my car repaired, even though costs and uninsured losses are recovered?

Just interested to understand it all!

Yes. The fact that you have had one accident (although not your fault) makes it statistically more likely you will have another accident within the next 3 years.

mattymoo

Several people who work in insurance (myself for 20 yrs) have explained that NCD protection only protects the bonus, not the base premium from which the discount is deducted.

To personally attack people in the way you have in the first para just goes to prove your own ignorance in these matters by resorting to personal attacks. If you felt you had a case, why waste your time here. Just to to the Financial Ombudsman Service and see what they have to say. Would you like the number?

FlameCloud

DanG wrote: »

It is quite clear that mattymoo, iceicebaby, Iamthesmartestmanalive and flame cloud do not have the slightest understanding of insurance law nor it seems of what fraud is! It is because of rather inexperienced people like this lacking knowledge and education, but full of their own importance and conceit that insurers are mostly getting away with this fraud today. No one except one full of their own conceit would even contemplate using an identity on this forum of "Iamthesmartestmanalive", even glibly. Quad et demonastrandum!

I repeat my point. In law to increase a renewal premium offered if and because a windscreen has been repaired or replaced, or if any claim has been made where there is an additional premium paid for the protection of no-claims bonus, is fraudulent, illegal and default of contract. I rest my case.

1. I actually work in insurance, dealing in Fraud. So yes, I do know what fraud is

The Fraud Act (2006) states that-

"In all three classes of fraud, it requires that for an offence to have occurred, the person must have acted dishonestly, and that they had to have acted with the intent of making a gain for themselves or anyone else, or inflicting a loss (or a risk of loss) on another".

The classes are how it is committed. How have insurers acted dishonestly in raising premiums because of an increased risk? (and no, before you say it, you havent paid to protect your risk)

I'd really love to see a quote from case law which proves what you have said!

mattymoo

I've decided to help out our newbie poster who feels this board has gone downhill of late.

Go to this web page - http://www.abi.org.uk/Display/default.asp?Menu_ID=1140&Menu_All=1,946,1140&Child_ID=529

Policyholders can “protect” their discount. In return for a slightly higher premium, a policyholder with maximum NCD can retain their discount if he or she has made no more than, say, two claims in three periods of insurance. Alternatively, no additional premium is required, but the scale of discounts is marginally reduced. Note, however, that it is the discount that is protected. Insurers need to take into account a person’s claims history in setting the next year’s premium, whether or not the discount is protected. Policyholders will, therefore, need to consider whether, having notified the insurer of the circumstances, it is in fact economic to claim under the policy.

I've added the bold emphasis for clarity.

Labman_2

DanG

If anyone one asks you what you want for Christmas ask for some manners as you are clearly needing some.