Insurers now have to give better information when selling NCB protection
The Competition and Markets Authority (CMA)’s new rules about how no-claims bonus protection is sold in personal lines motor insurance have come into force today.
This means that all of the CMA’s 2015 Private Motor Insurance Order is now in force.
The other part of the order, which banned price comparison sites from stopping insurers offering their products more cheaply elsewhere online, took effect in April 2015.
Under the new rules that came into force today, brokers and insurers need to provide customers with better information when selling them no-claims bonus protection.
No claims bonus protection is a product sold by insurers and brokers that allows the buyer to keep their no-claims bonus – typically a discount to the premium paid – even if they make a claim.
But the CMA’s 2013 probe into competition in the private motor insurance market found that customers were confused about what the no-claims bonus protection was supposed to do, with some thinking that it prevented premiums from rising after a claim, for example.
Therefore the competition regulator concluded that customers lacked the information needed to make an informed purchase.
The no-claims bonus protection rule change has been criticised by brokers in the past because of the amount of time and effort required to implement.
Now the Private Motor Insurance Order is fully in force, all private motor insurers and brokers have to submit a compliance report to thwe CMA today, and thereafter every year on 1 February, starting next year.
The CMA said: ”The CMA will be monitoring compliance to ensure that consumers benefit fully from the order’s provisions.”