HOW CAN WRONG NCB AFFECT INSURANCE AGENTS

Car insurance in India is mandatory for every car owner for which the insurance policy-holder pays a premium amount and in return in case of any unfortunate accident the insurance company bears all the expenses arising due to it. Then the policyholder can make a claim in order to receive financial help as per the terms and conditions of the insurance policy. Car insurance companies also offer a unique proposition called No-Claim Bonus whereby policyholders are compensated for not making a claim in the preceding years.

No-claim-bonus or NCB is given as a reward, as an incentive for not making a claim on car insurance or Mediclaim. A significant parameter that NCB holds is that it can be transferred to the new insurer. However, while doing so few cannot resist the temptation to save on premiums by faking the NCB while moving to a new insurer. But remember by doing so, you are not only being unethical in your ways, but you shall also face problems when a genuine claim gets filed.

Filing wrong No-claim-bonus/ NCB

Always keep in mind, buying car insurance with fake NCB is as good as not owning any insurance. You may be drawn to ask for NCB while changing your insurance company in the hope that the new insurer will not find out. But it is just that easy to do wrong and expect that you get a clean slate going forward. It is always advisable to be careful and within the law. For just a few percentages of bonus or premium do not throw away your reputation or the insurance at stake. As an insurance representative, it is your duty to keep the client informed of all the laws and make sure the client does not break any rules as well.

For instance, let’s take an example. Say your client has car insurance with one claim each year option. When the new insurer was to step in after a period of three years on renewal, you decided to take NCB thinking it shall bring down the insurance premium amount. This way your client’s new premium amount is lower and NCB is higher. You are happy, the client is happy too. But this happiness is highly short-lived. As in the future say your client may meet an accident and make a claim. Every claim is investigated thoroughly and it will be clear you have wrongly claimed for NCB and misrepresented the facts.

The NCB protocol is simple and clear that one can avail of the facility if there is a change in the insurer on renewal. All you need to do is produce proof of the NCB earned by way of a renewal notice from the current insurer in your client’s insurance policy. Alternatively, you can also produce the original, expiring policy along with a certification that no claims have been filed on the expiring policy. Such proof can be in the form of a renewal notice or a letter confirming the NCB entitlement from the previous insurer.

One of the major causes of claims denial in insurance is seen to be the manipulation of NCB. As insurance agents don’t get lured to make your client alter the NCB for better premium rates or whatsoever. The insurance company shall be able to find the wrong NCB during the claims investigation, thus not only affecting your client’s policy but also your reputation.

Important facts to remember about the No claim bonus / NCB:

• For every claim-free year, the NCB keeps increasing
• Remember to advise wisely and ask the client to forgo small claim amounts to receive higher NCB
• NCB is applicable even while switching insurers during renewal
• NCB benefit cannot be availed on third-party car insurance
• NCB is connected to the insured as an individual and not the vehicle or car
• NCB calculation, transfer and certification are all very simple and transparent processes

Conclusion

As an insurance agent, it is your duty to have your relationship with your client characterized by trust and partnership. You must also the dignity, privacy, and rights of your client. You should be transparent in your communication, act openly, and be tolerant with your client. Always remember to be in compliance with contractual obligations and the insurance laws. Manipulation of No-claim-bonus/ NCB or any kind is a breach of the first and foremost principle of insurance - 'utmost good faith'. It may lead to customers' claims getting rejected.Policy may get cancelled without any intimation.If an unfortunate accident takes place after such an unintimated cancellation there will be a loss to the client, financially and emotionally. Your client may not get premium refunded at all. Even if your client does get refunded, the insurance company can retail the premium & refund only the partialpremium. Thereby creating an unethical situation with unwanted communication if such an event occurs.So, remember it is your responsibility to keep client aware of the insurance laws and make sure neither you nor the client breaches any rule for any reason.

FAQs - Frequently asked questions.

Let’s take a look at some queries on How Can Wrong NCB Affect Insurance Providers;

Does No claim bonus fall under an insurance policy as an Add-on?

No, the No claim bonus or NCB is not an Add-on to an insurance policy. If a client purchases an Own Damage or Comprehensive car insurance policy, they become eligible for a No claims bonus. However, if the client wishes to further protect the No claims bonus earned over years of not having any claim, they can purchase an Addon of No Claim Bonus Protection. It is an added protection over the NCB that the client shall be eligible for.

What can be the maximum No claim bonus applicable on any car insurance policy?

The maximum No-claim-bonus/ NCB applicable on any car insurance policy is up to 50%. In the first consecutive year of no claims, the NCB on your client’s insurance policy starts at 20% and eventually goes up to 50% in case no claims have been filed in the five consecutive years.

How do insurance companies check the No claim bonus claim& verify history?

All insurance companies do an extensive and exhaustive check on the No claim bonus/ NCB and other details declared on your client’s car insurance policy. They shall identify what is right or not. In case of any false declarations or representations made on the NCB, the insurance company has the right to not issue or even cancel the car insurance.