November 10, 2014

The average punter, Bankstone News learned this week, has no idea what a protected no claims bonus is. But that hasn’t stopped brokers unloading them by the truck-load on people who, like those ‘leading Lloyd’s underwriters’ we hear so much about in everyone’s marketing literature, simply enjoy the sound of words like ‘no claims’ and ‘bonus”.

Given that ‘bonus’ derives from the Ancient Roman word for good, anything with a name like that pretty much has to be a good thing, by definition (with the obvious exception of that bloke out of U2), The bonus bit of NCBs is the lower premium you pay if you haven’t claimed for two, three, four, five, ten years or whatever.

Naive punters have tended to assume that paying to protect an existing NCB would get them restored to the position in which they found themselves prior to any NCB derailing event (e.g. a claim). In reality, of course, PNCBs mean whatever a particular insurer chooses them to mean, i.e. something, nothing, or pretty much anything in between.

Sadly, brokers’ patient attempts to explain this to the punters have not always provided the utopian clarity of which regulators so fancifully dream, with the result that intermediaries have been forced to sell them to people seemingly incapable of understanding the value of something that may or may not limit some of the premium increase they face following a prang.

Is it any wonder, then, that brokers are warning that the Competitors and Meerkats’ Authority’s attempts to make P/NCBs fair/comprehensible are unwelcome and unworkable, especially within the completely unrealistic deadline set by the CMA. Not content with wanting PNCBs priced separately from main policies, the CMA apparently want brokers to “explain how rates may change if customers have an accident”. Like they know!

Introducing these absurd recommendations would cost brokers shedloads of cash and potentially force them to stop offering PNCBs altogether, which might or might not be a bad thing for consumers (nobody really knows), but would certainly not hurt brokers who make “little or nothing” from offering them, according to BeWilder’s Mark Blower-Dycke quoted in Insurance Types this week.

“If you have 40 or 50 different insurers with different wordings and policies, you are into hundreds of different versions that you would have to explain to the client,” MBD complains. Clearly, this level of transparency is completely unworkable. Whatever happened to Caveat Emptor?!

Meanwhile, in the world’s most pitiful insurance fraud ever, someone described by Bodyshop Mag as an “unemployed fraudster” (you’ll see why he’s unemployed in a moment) got caught attempting to hoodwink two different insurers with a ‘no claim bonus certificate’ he’d just knocked up on his HP Photosmartiejet.

Thankfully, crack anti-fraud squad the FEDs pounced to foil this fiendish attempt to swindle insurers out of whatever it is they would have been swindled out of (to reiterate, nobody really knows what an NCB is worth), landing our would-be fraudster with a 12-month suspended gaol sentence and 100 hours of unpaid Big Society labour for his troubles.

The attendant publicity will have done nothing to improve the man’s chances of finding employment in the world of fraud.

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