AS I write this column I am reminded of the many people who have squeezed me to justify the benefits of insurance for someone who has not had a claim for a number of years.
Many industry players would agree that this is not a phenomenon.
While ‘invisible’ benefits such as peace of mind are valid at times people want something tangible i.e. to make a positive difference in their ‘pockets’.
Understandably a theorist will criticise and try to thrash the foregoing thought but I bet a realist or a layman in insurance will vehemently agree with the same. Without diluting the insurance principles and its benefits today I have something that clients stand to appreciate and this takes the form of No Claims Discount or Bonus.
Reminiscent of what it is called this discount is a reward given to a client when they go for a given period without claiming on their policy.
Again I thought I should be careful to state that not all policies in general insurance qualify for NCD.
Non motor policies generally are not subject to NCD as their premiums are already ‘low’.
NCD therefore contextually applies to motor policies. Further there are some types of motor policies that do not qualify for NCD such as fleet policies.
The rationale on fleet policies is that the basic rate applied is lower compared to a standard policy.
A fleet policy is where someone has five or 10 vehicles for private or commercial purposes respectively.
According to the Pensions and Insurance Authority (PIA) minimum guidelines which are under review in a private fleet a rate of three point five per cent may be applied as the barest minimum.
In comparison to a standard policy which will attract a rate of six percent as minimum the former is already low hence does not qualify for NCD but for other fleet discounts.
The standard scale for NCD is 15 per cent  progressively annually i.e. 15 per cent  30 per cent, 45 per cent.
This progression continues until one reaches 60 per cent which is the maximum according the PIA guidelines.
A fascinating question is what happens when one makes a claim in the subsequent years.
Well the rule surrounding NCD is that upon making a claim there should be a scale down of the NCD by two notches.
Put simply if one enjoys a 45 per cent  NCD and suffers loss in that year then at renewal his discount will scale down to 15 per cent.
If a claim is made in the fourth year when someone enjoys a 30 per cent discount then NCD will fall to zero.
To enjoy this benefit many people would forego smaller claims that are within their means so that they continue to enjoy their respective NCDs.
Perpetual claimants will also think twice on whether to forego this incentive.
NCD is transferable. Upon sale of a motor vehicle the client can transfer to the new vehicle their earned discount.
Transfer with the same insurer is easy and straight forward but if one is crossing insurers then they will need proof of the same. This proof is usually in the form of a duly signed letter or a renewal notice.
Another point to put across is that NCD only applies to Comprehensive insurance policies and not those under third party. The rationale is as stated above, that is, premiums are already low.
So next time you renew your policy you can demand for an NCD from your insurer provided you qualify.
Other popular discounts in insurance are Large Volume Discount (LVD), Long Term Agreement, and Special Discount inter alia.
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(The author is a chartered insurer with ten years industry experience)