NIC rolls out “Enhanced No Claims Discount” directive January 1

As part of efforts aimed at addressing some of the challenges related to Motor Insurance, the National Insurance Commission has announced the introduction of the “Enhanced No Claims Discount” for third-party Motor Insurance.

The Enhanced No Claim Discount directive takes effect on January 1, 2019.

In a statement issued by the Commission and signed by the Commissioner of Insurance, Justice Yaw Ofori said the directive will be applicable to new businesses written effective January 1, 2019.

However, it does not apply to the renewal of businesses that existed prior to January 1, 2019, the statement noted.

A breach of this directive, according to the statement will attract a penalty of 20 times the premium that should have been charged.

A motor insurance policy is legally mandatory if a person wants to drive on any road and not face penalties. The Motor Vehicles Act, 1958 mandates every vehicle plying on Ghanaian roads to have at least, a valid third party liability policy.

The policy covers financial liability if the insured gets involve in a vehicular accident and harm any third party or property. Third party policy covers bodily injury or death of the third party arising out of an accident involving an insured vehicle and damage caused to any third party property.

In both instances, the insured will be financially liable for compensating the aggrieved third party for the damages caused. A third party liability policy covers this financial obligation and settles the compensation payable to third parties in case of any accidental injury or damage.

Please find below modalities of the directive:

1. The directive will initially apply to Third Party (TPJ 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
– 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\o/o for all categories of
vehicles. For the avoidance of doubt, the fleet discount of L\o/o applies to
Third Party policies, only. A fleet is defined as a minimum of five cars.
vii. The minimum limit of Personal Accident IPAJ 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 to/o of the sum insured for Private Individual vehicles.
x. The applicable rate for additional TPPD cover is 2o/o 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 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 |anuary 1, 20L9. lt does not apply to the renewal of businesses that existed prior to January 1, 2019.

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