What you need to know about No claim discount (Underwriting) - Part 5

The NCD does not just help to reduce your premium. It also sends a strong message to the underwriter on your profile.

If you are enjoying 50% NCD on your motor policy, what you are telling your insurer is that you have been driving without any claim in the last 5 years or more. This is an amazing feat and i can assure you every underwriter generally likes insured of such profile.

True enough, the premium collected will be substantially lesser than someone of exact profile with 0% NCD but that's not the point. Insurance is after all about pooling of risk and if an insurer can underwrite more good risk profiles than otherwise, it also means possibly lower loss ratio which translates to higher profit margin! How about that after all?

Thus, a high NCD level will help to increase your chance of having your qoute approval. This is especially true for High Value or High Performance vehicle such as Ferrari make or Subaru WRX STI. As such vehicles are not your common saloon vehicle, but comes with hefty price tag and / or high horsepower and pick up spped, generally the underwriter will prefer insured who has a proven track record of safe driving. What is the indicator they will look for then?

SHhhhh..... No Claim Discount. . .

However, i'm not saying here that NCD is the only indicator or only underwriting consideration. Well, there are many more factors that an underwriter will have to consider and look out for such as loyalty, business consideration etc. But NCD remains a strong indicator as it's proven.

What you need to know about No claim discount (Declaration) - Part 4

You probably have not noticed before on the top most portion of your motor proposal form a statement that reads:

"Statement Pursuant to Section25(5) of Insurance Act, CAP.142 (Or any subsequent amendments thereof) You must disclose all facts as you know or ought to know which may affect the insurance cover being applied for. Otherwise, the insurance policy issued may not be valid"

I can't emphasise more on this especially to car owners who intend to change car. I have seen enough of car owners declaring haphazardly their NCD level only to get themselves into unnecessary troubles.

Look, if the insurer collects $1000 premium from you based on the declared NCD and found that the NCD should be lower or nil, it is only right and natural that they collect the difference from you. If they are unable to do so, they may shorten your policy to cover the difference.

It makes thing worse when you realised only after an accident that your policy has lapsed as the policy has been shortened. In fact, if you read that statement again, it is stated clearly that the insurance policy may not be valid!

Is it too strict or unreasonable of the insurer?

One has to realise that the insurer depends a lot on the insured's declaration on material facts in order to underwrite on the risk and to provide a fair premium. Without the actual facts, the insurer may not be collecting the required premium and right terms and conditions. Thus, it is the duty of the insured to declare all material facts that he knows or ought to know as this forms the basis of the contract between both parties.

This is Utmost Good Faith in its essence.


So, if you intend to change car, help yourself by checking with your existing insurer on your current NCD on policy before you pen it down on the proposal form next time. Do not leave it to chance!

What you need to know about No claim discount (Transfer) - Part 3

Accordingly to GIA guidelines, NCD can be transferred to another vehicle you owned but it is not transferable to another person. Nevertheless, over the years, insurers have developed their own practice and do allow certain types of transfer.

The most commons are transfer between spouses and transfer between parent & child. There is also possible transfer between companies, say transfer from Sole proprietor to company. All the transfers will require the relevant supporting documents to be presented prior to approval. I have listed a common list which might not apply to all scenarios.

1. NCD transfer form - There is usually a standard format provided by the insurer.
2. Marriage certificate
3. Birth certificate
4. Grant of letter of administration or probate - For cases whereby the insured has passed away.
5. Registry of companies certificate
6. Driving license

However, do take note that some insurer will tie the NCD to the transferee driving experience. Therefore, if a father wants to transfer 50% NCD to the son but the son has only 2 years + of driving experience, the insurer may allow transfer of 20% NCD only then. Also, some insurer will not allow transfer if there is any at fault claim on the transferee.

Well, every insurer has own internal criteria and you might want to check with your own insurer before any commitment to the policy.

What you need to know about No claim discount (foreign) - Part 2

If you have been outstation and will be posted back, you may get your overseas insurer to provide you with a NCD letter so that you can present to your local insurer and enjoy NCD in Singapore. The NCD letter usually come with the insurer's letterhead and includes:


1. Your personal details
2. Last period of insurance
3. Number of claims free year or NCD level
4. Claim details, if any

Your insurer will recognise and award you with the NCD accordingly as long as the required details are completed and the last in-force date is not more than 1 year. E.g. Assuming today's date is 3rd March 08, the last policy expiring date should be after 3rd March 07. Some insurers may allow up to 2 years. For this, you will need to check with your respective insurer.

What you need to know about No claim discount (Basic) - Part 1

One way to reduce your annual premium is to earn your No Claim disount.

The No Claim Discount or NCD, as it's commonly known, is a discount provided by insurer as an incentive to the insured for being claims free. Thus, if you have been driving a motor vehicle and does not have any accident or claim against your policy on the last 1 year, your insurer will provide you with an additional 10% NCD on your renewal premium.

In Singapore, you may earn up to 50% NCD for private vehicle and 20% NCD for commercial vehicle and motorcycle. In some other countries, the NCD can go as high as 65% or even 70%.



If you are currently enjoying 50% NCD and has a at-fault claim against your policy, your NCD will reduce to 20% on renewal. Likewise, if you are enjoying 30% NCD and has a at-fault claim against your policy, your NCD will reduce to 0% on renewal.

Some insurers offer NCD protector to insured who are enjoying 50% NCD. The additional premium varies among the insurers but it is usually negligible, around 10% or minimum $50. The purpose of which is to safeguard your NCD at 50% in the event you have an at-fault claim in the policy year. However, if you have 2 at-fault claim in the policy year, the NCD will step down to 20%.