On 28 September 2012 the Office of Fair Trading (OFT) referred the supply or acquisition of Private Motor Insurance (PMI) and related goods and services in the UK to the Competition Commission (now known as the CMA) for investigation and report.
The CMA concluded that legal remedies were required to improve information on No Claims Bonus (NCB) Protection, as this was an area where the lack of consumer information was most acute.
As a result, the Order was passed in March 2015 and is to be implemented for New Business from the 1st August 2016 and Renewals from the 1st September 2016.
But what does this all mean for your motor insurance policy?
Those of us fortunate enough to have enjoyed four or more years of claim free driving have always been educated to protect your no claim bonus, this was standard and sound advice and to help you benefit from your hard earned discount if the event of a one-off incident or if there is no identifiable third party from which to counter-claim.
Over the years the scope of this discount, its method of calculation and the introduction of supplementary loadings in the event of a claim has made this benefit more and more complicated and difficult to identify its true value.
In addition different insurers apply different scales and use different applications for the protection of your no claim bonus.
So with effect from 1st August 2016, you will be provided with much more information in order that you can make an informed decision.
Your quote offer or renewal notice should include details of the scale of discount for no claim years, the implications of “step-back” scale in the event of an incident and the corresponding difference should your bonus be protected.
Whilst in the first instance this may seem like another information overload for your insurance terms & conditions, as if there weren’t enough already, in the long run it will help you make a more informed judgement.
As an independent broker, free to search all insurance markets we will happily provide you with a plain English explanation and comparing a whole range of providers will ensure you get the best option for your unique circumstances.
Whilst the order refers only to private motor insurance many commercial vehicle insurance products will apply a similar process.
Is this the end of protected no claim bonus? No, however it may highlight that for certain policy types it does not make economic sense to take on the increase in premium.
My personal view would be to take the added protection but understand the wider implications on premium increases in the event of a claim before doing so.
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