Page 221 - Motor Insurance Ebook IC 72

Guide for Motor Insurance

renewal business. If the loss experience on 'own
damage' claims is bad, then renewal will have to be
offered on the basis of 'excess' or restricted cover.

Insurers are in the process of setting up a common
database of all vehicle insured by them to ensure that
record of claims experience for OD can be verified and
insured appropriately.

Q6. What is 'No claim Discount?" Give your
Ans: arguments for and against this provision.
Insurers have found that the granting of no claim discount
is a powerful strategy to improve underwriting
experience. Today, it forms an integral part of rating
systems. However, over the years, it has been a subject
of controversy. There are many arguments both for
and against.

The no claim discount is usually opposed by insurance
underwriters brought up in the traditions of other
departments where scientific tariffs have been
developed. They find it difficult to reconcile their
approach with a system of rating which allow discount
off the premium in the event of no claim having been
made upon the policy.

Their argument is that this discount is a negation of an

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