What I am seeing in NCB is crazy…it is absolutely crazy. Look at the following:
- If there is no claim during the first year i.e., zero number of claims then HDFC Ergo General Insurance will give 45% on Own Damage (OD) premium as No Claim Bonus (NCB).
NUMBER OF CLAIMS IN THREE YEARS NCB % on OWN DAMAGE PREMIUM 0 number of claim 45% 1 number of claim 35% 2 number of claim 25% 3 number of claim 0% - If there is no claim during the first year, then Tata AIG General Insurance company gives 35% as NCB on renewal.
NUMBER OF CLAIMS NCB % on Renewal 0 35% 1 25% 2 20% 3 0% - ICICI Lombard General Insurance company proposes that if no claim made or pending during the preceding full year of insurance then they would give 20% as NCB.
ALL TYPES OF VEHICLES % OF DISCOUNT ON OWN DAMAGE PREMIUM No claim made or pending during the preceding full year of insurance 20% No claim made or pending during the preceding 2 consecutive years of insurance 25% No claim made or pending during the preceding 3 consecutive years of insurance 35% No claim made or pending during the preceding 4 consecutive years of insurance 45% No claim made or pending during the preceding 5 consecutive years of insurance 50% - Reliance General Insurance, Liberty General Insurance and Edelweiss General Insurance companies – in their policy wording gives no NCB chart.
That’s why I said whatever we are seeing (as above) is absolutely crazy. One can offer NCB the way they feel like, 45%, 35% or 20%. The Motor Policy wording informs us that the insured is entitled for no claim bonus if the policy is renewed within 90 days of its expiry date for long term as well as annual policy.
Let us understand NCB: If no claims are made in the first year, then you are eligible for NCB. However, why the NCB is limited only to Own Damage premium? I see absolutely no logic here. It is a way to loot the policy holder! There are two types of premiums in Motor policy: Own Damage Premium and Third-Party Liability Premium. All policies in India according to Tariff Advisory Committee (TAC), NCB is offered only on OD premium – as stated above 45% to 20%. The question is why not on the third party (TP) premium? If no claim is made, then on the entire premium the client must get NCB discount. By the way what does India Motor Tarif (IMT) say?
No Claim Bonus The insured is entitled for a No Claim Bonus (NCB) on the Own Damage section of the policy, if no claim is made or pending during the preceding year (s), as per the following table:
PERIOD OF INSURANCE | % OF NCB ON OD PREMIUM |
---|---|
The preceding year | 20% |
Preceding Two consecutive years | 25% |
Preceding Three consecutive years | 35% |
Preceding Four consecutive years | 45% |
Preceding Five consecutive years | 50% |
In some countries, the NCB / No Claim Discount (NCD) rate is set at 5%. In other words, the rate of discount the insured is entitled in case of comprehensive and third-party insurance if the motor vehicle did not incur any insurance claims is set at 5% of the premium per year. It means the NCB rates for comprehensive and third-party insurance at the end of the first year provided no claim is made during the first year… during the second-year renewal, the insured is entitled for 5%, third year -10%, fourth year – 15%, fifth year – 20%. There is logic and reason in 5% increase every year. However, in India, there is no logic. Company to company, policy to policy offering different NCB… everything is so different and confusing.
Policy wording of some companies do not mention NCB at all. Some companies are mentioning NCB as per their own whims and fancies. 45% of own damage premium if no claim is made during the first year. This kind NCB offering will create undue and unnecessary advantage for some companies. When ICICI Lombard General Insurance company promises to pay 20% at the end of first year towards NCB, why would anybody opt ICICI Lombard Motor insurance policy? They would flock to HDFC Ergo.
What are you doing Regulator? What are the insurers doing? Looting customers?