No Claim Discount back


The National Insurance Commission (NIC) has opened the floodlights for General Insurers to apply No Claim Discount (NCD) to their existing customers.

No Claim Discount is an insurance terminology used by Non-Life companies on clients who insure their motor vehicle for one year without an accident. In a memo issued by the Commission and signed by the Deputy Commissioner, Michael Andoh, last week, he stated: “We wish to inform you that the No Claim Discount (NCD) module on the Motor Insurance Data Base (MID) is now ready for implementation”. The letter set out six modalities on how the NCDs can be applied.

The application of NCD between the regulator, NIC, and the members of GIA had been a thorny issue since introduction of the MID. Insurers, industry operators say applying NCD is a globally accepted norm in the industry, explaining that it will win back Ghanaians’ confidence in insurance.

Motor vehicle insurance is the largest selling insurance product in the country because of its compulsory nature. However, last week when NIC set the modalities on how NCDs can be applied, players jubilated.

B&FT learnt that the regulator has directed NCDs should be applied to historic data as indicated in the Commission’s circular to the industry on 23rd January 2020. Other conditionalities will include premium charge at renewal for pre-2020 registered vehicles should not be lower than premium previously charged.

However, transactions pushed into the Motor Insurance Data Base (MID) from the insurers own software will be validated to ensure that premiums are not lower than the already undercut premiums in existence pre-2020.

More importantly, insured’s of pre-2020 registered vehicles can change insurers and still see benefits from the previously earned NCD, if any; and should not be considered ‘as a new business’, on condition that the renewal premiums should not be lower than what was previously charged still applies.

More importantly, too, the Commission will engage the industry periodically and agree on modalities to ensure that old Motor Vehicle Insurance policies issued pre-2020 are adjusted gradually to meet authorised premium levels.

However, an NCD will be applicable to only one vehicle at a time, while NCDs are allowed on a yearly basis irrespective of migration of vehicle from one insurer to another. Indeed, NIC has maintained that effective 2020, NCDs will only be applicable to newly registered vehicles, so far as third-party insurance cover is concerned.

The regulator pointed out that, with immediate effect, the underlisted fields are mandatory at renewal and inception of new policies. They include: insured’s name, date of birth; any valid national identification; contact number of insured; vehicle type; vehicle registration number, colour, cubic capacity and chassis number.

Others are year of manufacture, body type, number of seats, currency, duration of policy, type of cover, schedule and sum insured (for a comprehensive policy).

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