Partner Insight: Do no claims discounts deter PMI policyholders from claiming?

Customers should not put their health at risk

Gareth Jones
clock • 2 min read
Partner Insight: Do no claims discounts deter PMI policyholders from claiming?

Policyholders should be able to choose whether or not to have a no claims discount, and if they do have one, it should be clearly explained, says WPA

The argument is sometimes made that few customers want to lose precious discounts built up over years by making a claim, particularly when premiums will inevitably rise when they claim.

For WPA, deciding to protect your no claims discount by not claiming for a dented bumper on car insurance is one thing, but postponing a claim that could have severe repercussions for your health is quite another.

Charlie MacEwan, corporate communications director at WPA, says: "The point of a health insurance policy is to claim if you are ill. Key is that the mechanics of a no claims discount are explained and thoroughly understood before the purchase."

No claims bonuses are derived from the fact that insurance is priced to reflect the risk being taken on. So, factors such as age, location, state of health and lifestyle choices have an impact on PMI premiums because they have a bearing on the likelihood of policyholders claiming.

However, the practice of offering a no claims discount is a step too far for some. WPA believes that is all about choice and customers should be able to choose an alternative to having one.

Disproportionate increases 

There is also the issue of whether the penalties incurred from losing no claims discounts are reasonable. Some policyholders have experienced premium increases of over £1,000 on annual policies after claiming for only a few hundred pounds. 

Brian Walters, managing director of specialist PMI broker Regency Health, says: "Regrettably, it's the case that policyholders may see sharp increases at renewal following a claim, which is something that the industry needs to work on.

"This issue is particularly egregious where the claims-related increase outweighs the cost of the claim itself, which calls into question whether the product is delivering fair value to customers."

Going against the grain is never easy but WPA's stance ties into a wider notion of placing the customer at the heart of the insurance process.  

Amy Saber, general manager, retail at WPA, says: "We are passionate about not wanting to influence behaviour by customers feeling they have a financial burden on their policy in years to come.

"Inevitably, when customers contact us, it will be at a time when it's potentially more difficult for them physically or mentally, with the strain of an injury or illness on their shoulders. More strain [from insurers] is the last thing someone needs when they're unwell."

This myth-busting article is one of a series of 10 addressing common myths around PMI. Access the full list

This article was funded by WPA

More on Income Protection

PG Mutual partners with Validium on wellbeing counselling services

PG Mutual partners with Validium on wellbeing counselling services

24/7 helplines available to members

Hemma Visavadia
clock 13 May 2022 • 1 min read
Unum pays out over £200m in group IP claims in 2021

Unum pays out over £200m in group IP claims in 2021

Total pay out of £366m

John Brazier
clock 06 May 2022 • 1 min read
AFM members paid out 94% of IP claims in 2021

AFM members paid out 94% of IP claims in 2021

Totalling £34 million

John Brazier
clock 06 April 2022 • 2 min read

Highlights

First episode of The COVER Review goes live!

First episode of The COVER Review goes live!

New monthly programme

John Brazier
clock 21 April 2022 • 1 min read
The Rising Stars of Protection: Adrian Benjamin

The Rising Stars of Protection: Adrian Benjamin

"Getting into the insurance industry is very difficult, I had to fight my way to get in"

Hemma Visavadia
clock 20 April 2022 • 6 min read
Where protection meets sustainability

Where protection meets sustainability

"Being a sustainable business means more than just meeting climate targets"

Hannah Godfrey
clock 19 April 2022 • 7 min read