The Illusion of No Claims-Discount Protection
Let's start by covering what a No-Claims Discount (NCD) even means;
The most common and accepted definition of NCD is: “an entitlement given to a driver if no insurance claim has been made under your policy for a year or more with the current/existing insurer”.
So effectively, NCD reduces the insurance premium you pay for the subsequent year and is the only common and approved standard followed by all insurers, and are thus should be transferable across Insurers.
In simple terms, after 5 years of without an “at-fault” accident, your car insurance premium should be half what it was before.
For Private cars
Period of insurance with no claim | Discount on renewal |
1 year | 10% |
2 years | 20% |
3 years | 30% |
4 years | 40% |
5 years or longer | 50% |
However, in the unfortunate event that you do have to make a claim made under your policy, your NCD will be reduced as follows:
For Private cars
Current NCD | NCD after 1 claim |
50% | 20% |
40% | 10% |
30% and under | 0% |
(Not applicable if you are found to be totally not at-fault).
Your NCD will be reduced by 30% for each at-fault accident. Hence if you made more than 2 claims within a policy year, your NCD will be reduced to 0%.
eazy's take on it
We see the concept of NCD as a stroke of brilliance by its creator. The cumulative effect has made drivers become attached to it, creating a culture of drivers who don't want to lose what NCD they have already accumulated. It serves as a badge of honour - letting others, and insurers, know that you are a safe driver who is unlikely to make a claim. Not having NCD indirectly means that a driver could be perceived otherwise.
NCD has become something highly coveted by drivers in Singapore.
This is no Protection on the premium you pay for car insurance!
To capitalise on this, Insurers have started getting creative on how their own versions of NCD works. Insurers started offering protection, making you pay extra for said protection. Do you want “NCD for life”? Youll get it, but only if you stay insured with that insurer for that long. All the NCD derivations and “protections” are not standardised, have no approved standards by regulators, and are only offered by specific insurers, thus are different between each and is Non-Transferable.
For example, you might see this chart on an insurer's website:
| NCD Protector | Protects your NCD at 50% even if you had an at-fault accident |
| NCD for Life | Maintain your NCD at 50% for life even if you had an at-fault accident |
| 60% NCD | Extra 10% above 50% NCD |
Non-Transferable is the disclaimer they do not want you to know
What is Non-Transferable? That means the benefit only applies if you stay with that insurer, and ceases if you switch, locking you with that existing insurer. Don’t want to lose your NCD? Then be at the insurer's mercy for renewal premium.
Every Insurance contract will state clearly in fine print that they reserve the right to adjust your base premium on renewal. So, if you were paying $1,000 on 50% NCD, they have every right to charge you $3,000 on 50% NCD after an at-fault accident claim, because they increased the base premium. This is something that is rarely highlighted when they sell the car insurance to you.
So what should I do on renewal?
It is always best to consult with your insurance broker, as to which insurer is suitable for your profile and individual needs. Brokers are in the best position to give you a realistic estimate of any potential loading on your renewal insurance premium in the event of an accident.
Had an at-fault accident? It might be worthwhile to shop around and compare your 50% “NCD protected” renewal premium, against other insurers who are offering you only 20% discount.
You might be surprised: a 20% premium discount might work out to be cheaper than your existing 50% NCD premium.