Vol. 499 No. 2
67 Mr. M. Kitt asked the Tánaiste and Minister for Enterprise, Trade and Employment the reason an insurance company (details supplied) is allowed raise the premium for car insurance by £600 through reduction in no claims bonus from 70 per cent to 30 per cent when the cost of the compensation paid was only £305; and if he will ensure that claimants will be given the option of paying the costs themselves rather than be penalised in this manner. [2274/99]
The incorporation of no claims discounts in individual policies and the implementation of the no claims discount system are designed to reward safer driving on the part of motor insurance policyholders. Insurers may set premiums and impose loadings in the light of their underwriting experience and regulate their no claims discount systems in the light of their claims experience. There is a general misconception that no claims discounts are no blame discounts and, therefore, that no claims discounts will not be affected unless and until blame has been established against the policyholder. That is not the case, and, in the event of an accident where the insurer is committed to an outlay the policyholder may lose some or all of the no claims discount. Some insurers allow claims up to a certain value before any discount is lost. In other cases it may be more economical for the policyholder to bear the cost of the claim (e.g. car repair) where the amount of the claim is less than the loss of a no claims discount or the imposition of a loading.
In the case referred to by the Deputy, payment by the insurer of a third party claim resulted in a reduction in the level of the policyholder's no claims discount from 70 per cent to 30 per cent. The insurer has confirmed that the no claims discount reduction was made in accordance with the terms of the motor insurance policy. The insurer also indicated that, normally, the no claims discount would not be reinstated immediately following an accident which results in a payment of compensation. However, in this instance, I understand that the insurer, taking into consideration the fact that it was a small claim and that their policyholder had been insured with that company, accident free, since 1972, has decided that the motorist's full no claims discount should be reinstated.
In general, I have also been informed by the Information Service of the Irish Insurance Federation that certain authorised insurers may agree to grant discounts of motor premium rates where the policyholder is prepared to accept a policy excess greater than the excess provided for under a specific policy.
