A major flaw in the way insurers deal with no-claims bonuses could mean millions of drivers are paying too much. That's the claim made by Auto Express, which made the discovery when checking up on a complaint by a reader.
The problem stems from the limits on how many years a driver can go without making a claim and still get additional discounts. After this limit, additional claim-free years don't lead to any further premium drops. While this limit is typically five years, the figure varies from company to company: an Auto Express survey found a range from four years to 20 years.
When switching from a company with a higher limit to a lower limit, this isn't a problem. For example, if a customer from insurer A with a five year limit gets a quote from insurer B with a four year limit, the quote will include a discount based on four years without a claim.
The problem is when the change is the other way round. If a customer from insurer B has been five years without a claim goes to another firm, insurer B will only verify that they've reached its four year limit. This means that even though the driver should qualify for a full five-year discount from insurer A, they won't be offered it because there isn't proof that they have the fifth claim-free year.
The Association of British Insurers said it was looking into the issue and is considering setting up a database that confirms how many years each driver has gone without making a claim, regardless of the limit on their current policy.