Following the announcement by Direct Line that from January 2008, new and existing customers who suffer damage to their cars caused by vandalism will not have their no claims discount disallowed should they make a claim. My question is, is there still a need for the traditional ‘No Claims Discount’?
The use of ‘NCD’ as a marketing tool has been prevalent within the last few years as insurers try to be innovative and want to be seen as providing the highest discounts in the market. Companies such as Direct Line and the CIS have introduced a new slant of the use of ‘NCD’, stating that all named drivers on its policies can earn their own ‘NCD’, whereas Esure has advertised the fact that its policyholders can get up to a “massive 75%” no claims discount.
This discount seems to have been around since the dark ages, and in fact it was first introduced by Cornhill Insurance in 1957. For fifty years motor insurance underwriting has used a ‘no claims discount’ scale when calculating insurance premiums. Therefore, is there now an opportunity to dispense with this out of date method? Gone are the days when the policyholder’s new insurer would require to see proof of any no claims discount earned, and most insurers now only require the previous insurer’s policy number.
