No more 'No-Claim Discount' for third-party policyholders – NIC

The National Insurance Commission (NIC) has issued a statement saying its ‘No-Claim Discount’ (NCD) regime “shall not apply to third-party motor insurance”.

In early October this year, members of the Ghana Committed Drivers Association issued a one-week ultimatum to the NIC to withdraw a directive asking all insurance companies to deny third-party motor insurance policyholders their No-Claim Discount (NCD) or they would strike nationwide.

At the time, the NIC explained that it had been forced to issue the directive because of current developments in the industry, which have resulted in under-pricing and under-cutting of premiums.

The situation, according to the NIC, was hurting the industry.

But the drivers said if the NIC stopped spending huge sums of money on cars and salaries, it could pay the claims.

In its recent statement, the NIC said: “The directive will initially apply to third-party (TP) motor insurance and the third-party components of the other classes of motor insurance policies only, such as comprehensive and third-party, fire and theft policies”.

Read the NIC’s full statement below:

1. The directive will initially apply to third-party (TP) motor insurance and the third-party components of the other classes of motor insurance policies only, such as comprehensive and third-party, fire and theft policies.

2. The following conditions will apply:

i. The TP premium will be a flat premium.

ii. The flat premium for TP motor insurance will be 85% of the current basic

– the premium of private individual and private corporate vehicles.

iii. The flat premium for TP motor insurance will be 90% of the current basic

premium of all other classes of vehicles.

iv. All other charges and additional payments will then be added to arrive at

the final premium payable by the policyholder.

v. ‘No-Claim Discount’ (NCD) shall not apply to third-party motor insurance.

vi. The fleet discount is capped at a maximum of L% for all categories of

vehicles. For the avoidance of doubt, the fleet discount of L% applies to

third-party policies only. A fleet is defined as a minimum of five cars.

vii. The minimum limit of personal accident (PA) cover is GHS 5,000 for all

classes and categories.

viii. The minimum limit on third-party property damage (TPPD) is GHS 5,000

for all classes and categories.

ix. The applicable rate for additional TPPD cover is t% of the sum insured for

private individual vehicles.

x. The applicable rate for additional TPPD cover is 2% of the sum insured for

all other vehicles.

xi. Loadings for cubic capacity (CC) and age of the vehicle will be applied at

the discretion of the insurer. These loadings shall in no way reduce the

premium payable by the policyholder if the loadings had not been applied.

3. The third-party insurance premium component of the comprehensive motor

insurance and third-party, fire & theft motor insurance will be arrived at using

the criteria enumerated above.

4. The directive is applicable to new businesses written effective 1 January 2019. It does not apply to the renewal of businesses that existed prior to 1 January 2019.

Please note that the penalty for the breach of this directive is 20 times the premium that should have been charged.