Is NCD Protection the next PPI scandal?

Veteransaver

born_again said:

I remember that Offset Mortgages were going to be the next after PPI... That never happened.

Never heard that, why would that have been a thing? 

Veteransaver

NaughtiusMaximus said:

Veteransaver said:

CliveOfIndia said:

It's not a scandal, it's clear what the cost and benefits are.

Veteransaver said:

It seems to mostly cost them around £20-30, but what is it actually protecting?

And even the difference between 4 years and 0 years NCD seems to be around 10%-15% on average.

If you assume that 4 years of NCD gives you a 10% reduction in premium, if your premium is £500 per year then you've saved £50.  So in the event of a claim, that's £20 well spent.  Obviously the figures will vary depending on what your premium actually is.

Protected NCD is, essentially, just another insurance product.  I've paid thousands over the years in house and car insurance, never claimed once - am I being ripped off?  I could, if I wanted, choose to not have house insurance - but it's my choice that the potential benefits outweigh the cost.  It's exactly the same with protected NCD - you're free to choose it or not, depending on your own view of the cost/benefit trade-off.

is it really clear what the costs and benefits are?
NCDs are highly variable and vague
I'd argue that paying £20 for a 10%-20% chance (IE the chance of having a claim) of saving £50 is not money well spent. There'd have to be a 40% chance of a claim in the next year for it to break even, which considering you would already have built up 5+ years of NCD, makes that statistically unlikely.
And if you do have a claim, the cost of NCD protection goes up considerably too.

And PPI was "essentially, just another insurance product"....

The PPI scandal was primarily driven by mis-selling, far more so than the poor value of the product itself.

Extended warranties are a better comparison to NCD protection.

It's a fair point about PPI and a fair comparison with extended warranties. Though there is choice of where you buy extended warranty protection from, not so for NCD protection.
Also there is no "claim" as such with NCD protection just number on a letter.
I wonder if there is any sort of market for a product that insured against an increase in premium caused by a claim for 3 years for example? NCD protection is only insuring a really low amount usually.
As well as an add on insurance to pay your excess (like a CDw on a hire car)

DullGreyGuy

Veteransaver said:

I wonder if there is any sort of market for a product that insured against an increase in premium caused by a claim for 3 years for example? NCD protection is only insuring a really low amount usually.
As well as an add on insurance to pay your excess (like a CDw on a hire car)

Possibly, however how are you going to substantiate if someone renews at £150 more than they paid last year if thats related to the claim or the fact that claims have generally spiked so "everyone" is seeing price increases?

There will be a question of if the insurance drives behaviour, do people stop driving as carefully because there is less consequence of their actions and/or will claim for more minor damage as combining this and XS insurance means there is no financial impact so you may as well claim for everything? 

I think there are better ideas for new products/ features than this personally but clearly just gut reaction not the outcome of a detailed new product proposal analysis.