Motor No Claims Bonus Protection & Claims Loading

[tvman]

I think the point is that the baseline premium may be increased because you have made a claim, thus nullifying the effect of the protection. Although I have NCB protection and made a claim 2 years ago - I have expected an increase in my premium in each of the last 2 years but it hasn't happened so it appears my NCB protection being applied.

 

[donncha]

Indeed that is the point. Even if you pay for NCD protection, the insurer can find other ways to bump up your premium after a claim, as I and the OP found.
Those in the industry might recognise the reality of NCDs, but for the average consumer (like me), when you pay for protection, and then make a claim, you have a reasonable expectation not to see a hike on your next renewal. We're not talking 10 or 20%, in my case it was 70% higher.

Incidentally, you are paying to protect the stage on the scale, not the discount %. To use the example above, if 50% is the discount applied after 5 years no claims, NCD protection will keep you on the 5 year level. But the insurer can decide to change the general 5-year discount rate to 40% if they want.

An honest pitch for NCD protection would read something like this: "Buy NCD protection. If you make a single claim in three years, we will most likely increase your premium, but we're not telling you by how much. But it probably won't be as much as it would have been if you didn't buy NCD protection."

The fact that they are not honest in selling the product is a basis for a complaint to the Ombudsman.

 

[Tribesman111]

MrEarl

I recommend you make a complaint to the Financial Ombudsman (after exhausting your complaint with the insurer).

In a similar situation, I did this, and won my case.

Unfortunately the compensation does not justify the amount of effort involved. The insurers have staff paid to deal with these complaints, so can spin out the process with endless obfuscation. But the more people that follow through on the process, the better the chance to get insurers to clean up their act.

Based on the decision from the Ombudsman, I would say that No Claims Bonus Protection is worthless. I won my case only because the insurer did not make clear how worthless it is in the terms. All the protection does is keep you at the same stage (in years) on their discount scale. However, they can change the discount rate. They can apply claims loading. They can trump up a new "minimum premium" (this is what they did to me). And of course, they will mark you as "zero years claim free", which is what other insurers will look at when you shop around.

In my opinion, NCD protection sale should be made illegal unless the insurer guarantees that a single claim will have zero impact on your record - the "years claim free" value should remain unchanged.

I'm happy to share the full Ombudsman decision by PM with anyone who thinks it will be helpful in fighting their case.

D

Hi,

new poster - was googling this topic generally and was directed to AAM & this thread, & signed up as am in a similar situation and want to take it further. Know its a long shot given the age of thread etc but I was hoping to get a copy of the Ombudsman decision (as a newbie can't PM you for it..)

Thanks,

Tribesman

MrEarl

I recommend you make a complaint to the Financial Ombudsman (after exhausting your complaint with the insurer).

In a similar situation, I did this, and won my case.

Unfortunately the compensation does not justify the amount of effort involved. The insurers have staff paid to deal with these complaints, so can spin out the process with endless obfuscation. But the more people that follow through on the process, the better the chance to get insurers to clean up their act.

Based on the decision from the Ombudsman, I would say that No Claims Bonus Protection is worthless. I won my case only because the insurer did not make clear how worthless it is in the terms. All the protection does is keep you at the same stage (in years) on their discount scale. However, they can change the discount rate. They can apply claims loading. They can trump up a new "minimum premium" (this is what they did to me). And of course, they will mark you as "zero years claim free", which is what other insurers will look at when you shop around.

In my opinion, NCD protection sale should be made illegal unless the insurer guarantees that a single claim will have zero impact on your record - the "years claim free" value should remain unchanged.

I'm happy to share the full Ombudsman decision by PM with anyone who thinks it will be helpful in fighting their case.

D

 

[donncha]

Sorry Tribesman,, I threw out the FO letter.

Have a look at the T&Cs from your insurer and see what it says in regard to NCD.
In my case (123/RSA at the time), it said almost nothing.

My memory is that FO upheld my complaint because the insurer did not spell out that they could increase the premium after a claim through other means, while leaving me on the same stage on their scale.