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What is the No Claim Discount (NCD/NCB) ?

The No Claim Bonus/Discount (NCB/NCD) is a bonus or discount on renewal premiums offered by insurance companies to drivers (i.e., the policyholders) who have not made any claims in the past year. You might be wondering, how does the No Claim Bonus/Discount actually work? And does it apply to other insurance products, such as medical insurance and Voluntary Health Insurance Scheme? Let's break it down with Bowtie right now!
Author Bowtie Team
Date 2023-11-17
Updated on 2023-11-17
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What is the No Claim Bonus/Discount?No Claim Discount Calculation MethodCan No-Claim Discount be transferred?Will a Single Claim Result in Loss of All No Claim Discounts?Should You Make a Claim After a Traffic Accident"Do VHIS or Other Medical Insurance Plans Have No Claim Discounts?

What is the No Claim Bonus/Discount?

The No Claim Bonus/Discount (abbreviated as NCB/NCD) is a reward system where drivers (i.e., policyholders) who have not made any claims in the past year are offered a discount or bonus on their renewal premiums by the insurance company. The No Claim Discount first appeared in car insurance, and since then, more and more insurance companies have incorporated the NCB/NCD into their products to attract customers. NCB and NCD refer to the same discount, they are just different terms.

No Claim Discount Calculation Method

In Hong Kong, most companies that provide car insurance use a ‘progressive ratio’ to calculate the No Claim Discount (NCD), meaning that the longer you go without making a claim, the higher the discount you receive. The NCD varies between different companies and even different types of vehicles. From online data, the NCD ranges from 20% to 60%.

YearsMotorcycles and Commercial VehiclesPrivate Cars
Less than 12 months0%0%
1st year with no claims10%20%
2nd year with no claims20%30%
3rd year with no claims30%40%
4th year with no claims30%50%
5th year with no claims30%60%

Can No-Claim Discount be transferred?

The transfer of the No-Claim Discount takes place when the policyholder switches their insurance company. In certain instances, the accumulated “No Claim Discount” can be transferred to the new policy upon switching.

Under what circumstances can the No Claim Discount be transferred? And when can it not be?

Cases where the No Claim Discount can be transferred:

  • Transfer to another vehicle of the same type under their own name
  • With the employer’s agreement, from the company’s commercial vehicle to a private car
  • Switching to another insurance company (including overseas to Hong Kong / transfers within Hong Kong companies)
    • Remember, you must purchase a new policy within 12 months after the end of or cancellation of the old policy, and provide valid proof of the previous policy.

Cases where the No Claim Discount cannot be transferred:

  • Transfer to another type of vehicle under their own name
  • Transfer involving named drivers
  • Transfer to a new buyer when selling a car

If the “No Claim Discount” cannot be transferred, the NCD/NCB for the new policy will be recalculated. It’s worth noting that each insurance company’s method of calculating the No Claim Discount may differ, and the existing accumulated “No Claim Discount” may not necessarily be fully transferable.

Will a Single Claim Result in Loss of All No Claim Discounts?

For owners of commercial vehicles or motorcycles, making a single claim will reset the No Claim Discount/Bonus (NCD/NCB) to zero.

However, many insurance companies provide a “reduction mechanism” for private cars. If a driver has not made any claims for 4 or 5 consecutive years and the NCD/NCB reaches 50% to 60%, after making one claim, the NCD/NCB for the 5th or 6th year will return to the level of the 1st or 2nd year, that is, retain 20% to 30% of the NCD/NCB.

Of course, there are situations where making a single claim will result in the loss of all No Claim Discounts, including:

  • The driver makes two claims in one year when the NCD/NCB reaches 50% to 60%
  • The NCD/NCB level is less than 50% (i.e., within the first 4 years of insurance), and at least one claim has been made

Should You Make a Claim After a Traffic Accident

As mentioned above, making a claim can potentially result in the loss of all No Claim Discounts, leading many people to wonder:

“Should I hide a traffic accident from my insurance company?”

You must notify your insurance company within 24 hours of a traffic accident, but you can reserve your “claim decision”. If you believe that the loss of the No Claim Discount is greater than the amount of out-of-pocket repair costs, you can choose to forgo the claim. Conversely, you can still apply for compensation.

"Do VHIS or Other Medical Insurance Plans Have No Claim Discounts?

Many people are curious, besides car insurance, do other types of insurance offer “No Claim Discounts”?

To increase product attractiveness, many medical insurance products also include No Claim Discounts (NCD/NCB). However, different insurance companies and even different plans have different arrangements:

  • Offering premium discounts at renewal (similar to car insurance) and also calculated on a progressive ratio. The discount varies from 5% to 15%, allowing policyholders to pay less premium at renewal (Example: Traditional medical insurance from Insurance Company Z).
  • Deposited in the policyholder’s premium savings account, which can be used to pay for premiums, but the policyholder cannot withdraw from the account (Example: VHIS from Insurance Company P).
  • Offering no-claim medical check-up services (Example: VHIS from Insurance Company A).

Bowtie’s Brand New ‘No Claim Reward’!

Have you ever thought that ‘No Claim Rewards’ can be used to pay for excess medical expenses?

As long as there are no claims within 6 months after the VHIS policy takes effect, you can earn this reward!

Monthly premium × 8% = BowtieCash earned for the month

What is BowtieCash used for? It can be utilized to cover any outstanding balance.

If future claims surpass the coverage limit of the Bowtie VHIS plans, BowtieCash can be used to pay for these additional medical expenses.”

The more rewards you accumulate, the more claims you can make!

Click Here to Learn More!

When selecting medical insurance or VHIS, the “No Claim Discount” is by no means the most important consideration. Adequate coverage, long-term cheaper premiums, and compensation data should be the items you pay most attention to. If you are undecided between two similar plans, you can certainly consider other additional factors, such as the “No Claim Discount”, to make your decision.

Where Can I Find VHIS That Provides Sufficient Coverage, Adequate Compensation, and Affordable Long-Term Premiums?

Bowtie’s VHIS has a monthly premium of HK$2001, providing an annual coverage of HK$600,000, with an actual compensation rate reaching 90%2!

  • 1The standard monthly premium for a 30-year-old non-smoking male insured under Bowtie's VHIS Flexi - Regular plan.
  • 2Actual compensation rate for Bowtie's VHIS Flexi - Regular plan (Nov 2022)

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Enjoy below offer for blog visitor! Purchase VHIS now for yourself & families to save more tax when the tax allowances become less😭 .

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