Do you understand the cost and benefits of protecting your No Claims Bonus? Studies show that most clients do not.
From August the 1st 2016, new regulations will be introduced that affect how insurance brokers can provide cover for Protected No Claims Bonus/Discount. This change is being introduced in response to a recent study that highlighted confusion between customers regarding the actual benefits of Protected NCB.
The NCB protection study highlighted a distinct lack of customer awareness of the following facts:
- Even with NCB protection, in the event of a claim, their insurance premium may still increase at renewal in relation to the claim.
- That NCB protection will only protect the NCB years stated on paperwork, but will not provide an absolute protection of the current percentage discount.
- That NCB protection will not protect their number of years NCB if they make multiple claims within a given year. The acceptable number of claims within a year before a customer is penalised can vary.
- Of the step-back scale for claims, and how their NCB is affected in the event there is a claim. Quite often in the event of claim, without protected NCB in force, 5 years would be reduced to 3 years. The difference in discount between 5yr NCB and 3yr NCB can be anything from 10% to 30%.
- Of the discount they receive in response to their accrued NCB; for example what actual reduction to your premium is offered for your 5yrs of claim free driving? 50%? £100? 1⁄7? Resultantly, customers are commonly unable to assess whether the NCB protection is worth the cost to include the cover on their policy.
Changes being introduced are designed to ensure customers are able to make an informed decision on whether or not they wish to have NCB protection on their policy. From August 1st 2016, all brokers and insurers must ensure customers understand the following key facts about protected NCB:
- The “implied” price of NCB protection. This is the difference in premium with and without the cover.
- The average percentage discount scale for the calendar year that ended more than one month before the offer of NCB protection.
- The step back rules, and how any claims would affect the policyholders NCB with and without the protection in force.
- The fact that inclusion of NCB protection will not protect the policy premium, and that the price may still increase following an accident regardless of whether or not the NCB protection cover is purchased.
Connect Insurance will be sure to notify you clearly within your renewal documentation regarding the Competition and Markets Authority (CMA) Private Motor Insurance (PMI) Order and how this will affect your access to No Claims Discount (NCD) Protection. If you would like to discuss this further, or arrange a quotation, do not hesitate to call us on 01782 280 280.