CMA probe: Confusion over no claims bonus driving 'deep cynicism' towards insurers

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The CMA compared the relationship of insurer and customer to a parent and child

Insurers need to provide clearer information on no claims bonus protection (NCBP) and the rights of customers following an accident.

A study by the Competition Markets Authority (CMA), carried out on drivers between 15-28 May, found that most policyholders had limited knowledge of how NCBP works and did not know the cost of the protection.

The study found that most policyholders assumed there was unlimited protection and were unsure about the difference between at-fault and not at-fault. Although there was limited desire to see the financial value of NCB, consumers were keen to understand the general value of NCB.

The report added that confusion over the impact of an accident on a policyholder’s no claims discount, where they were not at fault, was driving a deep cynicism towards insurers and NCBP.

The research forms part of the provisional remedies published today.

The CMA also compared the relationship between customers and insurers, to that of a child and parent.

“Reliance and dependency on insurer drives low appetite for detailed information about entitlement,” it said.

“The insurer rewards good consumer behaviour with no claims bonus, while the child trusts the insurer to provide information on entitlements and to deal with a claim without any hassle.

“NCB is seen as high value and aspirational but there is very low understanding of its real value. Drivers desire for NCBP with little understanding of the product.”

The CMA has recommended that clearer information about NCBPs should be shown by insurers and on price comparison sites. Additionally, it should be shown as an add-on with a standalone cost.

The authority also said that insurers should do more to simplify the legalistic and long-winded language in the script that is read out to customers after an accident has occurred.

The CMA said that the initial information must be brief, clear and easy to digest, followed with more detail later, around 24 hours after the accident.