The New Motor No Claims Discount (NCD) practices – Consumers gain, Insurers leak?

special thanks to

Try this insurance Portal to see if this provides you with some convenience!

The date, 1st July 2010 will mark another day for a major change to a long established Motor insurance practice…. this time is about the manner the No Claims Discount (or NCD) is to be confirmed. We expect some rough moments ahead as we viewed this new confirmation procedure as being haphazardly handled…. but hopefully not! Was this the reason why the implementation is made to coincide with the day when increase (from current 5% to 10%) in the mandatory discounting for direct motor insurance purchases takes effect? The public if indeed they did face problems with their NCD confirmation, there is still a sweetener to those bad memories!

WHAT IS NCD? Any motor vehicle owners should know what NCD is all about. It is about discount given to policyholder (or registered owner) on renewal if the motor vehicle did not incur any insurance (result of own fault) claims on the previous policy. The percentage of discount allowed would increase over each policy renewal in the absence of any claim made on the policies…. subject to a maximum as prescribed in the policy wording (tariff format). The following are an illustration as to the range NCD and entitlements:

No-Claims-Discount – Claims-free range
1st Year 0% 0% 0%
2nd Year 25% 15% 15%
3rd Year 30% 20% 20%
4th Year 38 1/3% 25% 25%
5th Year 45% 25% 25%
6th Year 55% 25% 25%
7th Year 55% 25% 25%

The Insured is nevertheless allowed to transfer their earned NCD % to a different vehicle BUT only allowable to a single policy-single vehicle at any one time.

THE CURRENT NCD CONFIRMATION PRACTICE…. The existing practice is such that on renewal, the Insured brings his previous policy documents and declare the NCD level at the Point-of-Sale of the insurer or agent’s office- the agent or the insurer’s service personnel would allow the Insured the prescribed NCD percentage. The Insured then make the payment after the relevant No Claims Discount is given.

The insurer would then conduct an NCD check at the backend after receiving submission from the Point of Sale (PoS). This check is conducted with the industry Centralised NCD database, which is currently managed by Insurance Services Malaysia (ISM). If the NCD percentage is incorrect with a higher percentage of discount given to the Insured, then the process of recovering the balance would have to take place immediately. Insurer would make immediate attempt to recover by sending out a registered mail notifying the Insured of the discrepancy, and the Insured must pay up within the next 14 days….“three main reasons why the NCD is incorrect. First is because of an “own-fault” claim having been filed and registered……, second, the previous policy has not expired at time of purchase and thirdly, could be due to the NCD not being updated by the previous insurer(s) to the Centralised NCD database”

Failing to do so would risk having the policy cancelled without any further notice! The act of terminating the cover is provided in the declaration form which was signed during the purchase made at the PoS.

THE NEW NCD MANTRA? Effective from 1st July 2010, all insurers, takaful operators and Malaysian Motor Insurance Pool (MMIP) must have their PoS systems (whether owned by the insurer or by any third party) fully integrated to the Centralised NCD database via the ISM system. Purpose is to streamline the allocation of NCD at the front-end PoS to a more efficient level, reduce operational bottleneck at the back-end as well as improving transparency among all stakeholders, which include consumers. (Point-of-Sales (PoS) system simply means the computerised system at the point where the customer buys the insurance)

What the Insured should expect with this new mantra or practice can be summarised as follow:

  1. Insurance purchased NEW from an insurer – confirmation of NCD must be obtained directly (call) from the ISM-NCD system at the PoS. “Insurance purchased new” simply means Insured buy his or her policy with a NEW insurer. ALL STAKEHOLDERS MUST IN THE FIRST INSTANCE TAKE WHAT’S CHURNED OUT BY THE SYSTEM AS CORRECT. Any dispute thereto, can only be resolved at the back-end between the relevant parties. Thus Insured must PAY FIRST BEFORE ARGUING….. then work out something via the back-end – meaning if the Insured’s contention is TRUE, insurer will issue an endorsement with premium refund to the effect.
  2. In the case of RENEWAL (with the same insurer), the Insured can rely on the insurer’s back-end system for confirmation of the NCD level.
  3. Insured is still required to sign the NCD declaration form, albeit this time is solely for reason of claim that may either be reported late or discovered at a later date. If a claim is subsequently registered within the ISM-NCD’s  managed Centralised database, there would be a CLAW-BACK of premium due from the Insured – meaning Insured must settle the balance due within a prescribed time-frame.
  4. Since the allocation is very much system driven, the desired end results may not be too efficiently achieved – meaning, DO EXPECT SOME UNHAPPINESS SOMEWHERE BUT, looks like from the existing ISM’s Standard Operating Procedures for Point-of-Sales (PoS) integration there are more GAINS FOR CONSUMERS rather than for the INSURERS. We shall check this out at the later paragraphs (below).
  5. If the Insured is transferring the NCD from his overseas’ motor insurance policy, he or she has no choice but to PAY UP FIRST BEFORE attempting to resolve it at the back-end.
  6. In the case of the transfer of NCD between SOLE PROPRIETOR and INDIVIDUAL (unless done with the same insurer), the current system has no mechanism for new insurer to update the previous insurer…. which means there are possibilities of a LEAK IF UNKNOWINGLY, the previous insurer allowed the NCD to be applied to another motor policy.
  7. While the industry has done numerous NCD-database sychronisation exercises, things are unlikely to be orderly. You know, lah! When such thingy involves database, people, system and processes, the end results are always with some PARALYSIS…. In any case you get an NCD % lower than expected, please don’t go HIGH-BLOOD okay! Just get the agent or the personnel at the Customer Service counter to assist you with the next step. But in any even if you get a HIGHER NCD % than what you should be getting, CONSIDER THIS YOUR BONUS…. keep it to yourself! But if YOU are a GOD-fearing guy, go ahead and bless your insurer, they needed it! “….if you get a higher NCD %, consider this as a BONUS, but keep it to yourself!”
  8. During the initial stages of this implementation, it is expected that things are NOT stable, thus it is BEST you check YOUR NCD online at this site: ISM – NCD Online Check

THE ISM’s STANDARD OPERATING PROCEDURE….. Insurers’ loss but consumers gain! If you are an insurance practitioners or agents, you may be interested to view this file-link:
Please REGISTER BY GOING TO THE LEFT-HAND LOWER COLUMN – once you are registered, you can come back to this site, log in, click on the link and the file will automatically open for this eReport.


Download eReport?

[download id=”1″]

Analysing from the Standard Operating Procedure worked out by ISM, Insureds stand to gain more in the process (at least that’s for the initial stages of implementation)….. AT THE EXPENSE of the insurers / takaful operators, perhaps. You can read by  clicking and registering for the embedded document here.

Do give us some comment….. MORE OPINIONS MEAN MORE FEEDBACK TO THE INDUSTRY, which also means such procedures can be further improved.


Copyright secured by Digiprove © 2010

Related Posts with Thumbnails

25 comments for “The New Motor No Claims Discount (NCD) practices – Consumers gain, Insurers leak?

  1. Muhammad
    August 18, 2014 at 12:04

    I have withdrew my NCD 55% and transferred to my new car. The salesman said that the insurance discount difference will be deducted to my car price.

    The question is on my new insurance, it says that I paid full amount and the NCD is 0%. Since I had transferred my full NCD to new insurance shouldn’t it be 55%? Or the NCD counter goes back to 0% and the new insurance company just reimburse the difference?

    Please advise.


    • September 20, 2014 at 07:48

      dear Muhammad,
      If you had withdrew your NCD 55% and passed necessary documents to your agent to do the necessary transfer (online) from the Centralised NCD system ( or then the NCD 0f 55% should be stated in the insurance policy. You should check those mentioned sites to confirm the NCD of 55%. A merely discount off the car sale price is NOT the answer. Since this 55% is not stated on the policy document you may want to approach the customer service counter of your insurance company and request them to make a refund to you. Sometimes there are other issues, for examples your insurer of the previous policy did not make the NCD withdrawal endorsement because you did not settle the additional premium attaching to the withdrawal, or your agent did not request confirm the NCD from the online Central NCD system when issuing the online policy for your new car, or at that time the NCD of 55% was not updated; there may be other reasons.
      Please do check with your present insurer and let us know if you still have a problem.

  2. Maz
    August 14, 2013 at 10:42

    I have a question. I bought a car on 2004 and sold it to my brother on 2009. Now I plan to buy a new car. Can I transfer the ncd from previous car? Because I changed the owner name to my brother. Thanks

    • August 24, 2013 at 01:56

      The question is not clear but supposedly if you had not transferred after selling to your brother, and now only you have done so, then it is unlikely you get any NCD or maybe you are still lucky you get the lowest level. Then I would not like to speculate. Please do elaborate further your issue, ie. Your NCD % at time of the sale and when did you actually transfer your car.

  3. Structured Loans
    October 10, 2011 at 18:13

    hey there and thanks for your information ? I?ve certainly picked up anything new from right here. I did however expertise a few technical points the usage of this website, as I skilled to reload the web site a lot of times previous to I may just get it to load correctly. I were puzzling over if your web hosting is OK? Now not that I’m complaining, however sluggish loading instances instances will sometimes affect your placement in google and can damage your quality score if advertising and ***********

  4. CK
    August 23, 2011 at 14:56


    I just got a new car and before I manage to transfer my old car NCB 45% to my new car, my new car got hit by a motorbike. I made a police report and the biker did not.

    My question is if I make an insurance claim on my new car insurance NCB 0% and after completing the process, can I still transfer my old car NCB 45% to my new car without losing the 45% discount and getting the rebate from my paid premium for my new car?

    • September 3, 2011 at 20:57

      First of all there should not be any problem with the NCD transfer but do get this done after the claim settlement. You will still get the refund from the premium you had paid in respect of your new car.
      Secondly, if the biker failed to report the accident, what you should do is to seek out the insurance details of the bike – unless this bike has no insurance at all you can still pursue this with the insurer that insure it.
      Do consult your agent or your insurance company….

  5. Crotalus
    June 21, 2011 at 20:42


    I would like to inquire regarding a situation example.
    I currently own a vehicle (Vehicle A) with 55% NCD entitlement from insurance company A.
    I bought a new vehicle (Vehicle B) and transfer my NCD from Vehicle A to Vehicle B (insurance company B).
    I paid the difference when I withdraw the NCD from Company A.
    2 months later, Company B has yet to reimburse me for my 55% NCD entitlement(Vehicle B) I transfer from Vehicle A (Company A).
    If Vehicle A get into an accident(after I have withdrawn and paid for the NCD) and claim the insurance, does this void my 55% NCD (which I have already withdrawn from Vehicle A/Company A but Vehicle B/Company B has yet to process it?)

    In a dilemma.

    • June 22, 2011 at 21:18

      The above writeup is too not clear to me, but i can assume the following:
      When you transfer your NCD from veh A to veh B did you pay the full premium before NCD to insurer B? Noted you had paid insurer A the difference in premium when you withdrew the NCD.

      What insurer A is supposed to do is to update the Centralised NCD system and then advise the insurer B to retrieve it for the purpose of endorsing the NCD into polivy for vehicle B; thereafter to refund you. If you have not get the refund you should call up both insurers to enquire the position.

      If you had paid the balance of premium for the withdrawal of the NCD while with insurer A and vehicle A then met with an accident…. your NCD of 55% is not affected since you had paid the premium and also you had requested transfer to vehicle B. Your NCD of 55% is intace, no worries.

      If you have any further issues write to us again….

  6. Lim Swee Seng
    June 3, 2011 at 07:50


    I got some question …

    Currently I riding a 150cc motorcycle…my insurance going to end of 20 of July .I going to sell my bike off on july ,and Upgrade to 650 cc motorbike .Is it the NCD can bring over ? SO the current insurance i should cancel on after 20 of july the just can get NCD 15% ??

    HOpe can get from your answer soon..

    • June 3, 2011 at 09:45

      Premium Refund: Your motorcycle insurance is going to expire on 20th July, and if you sell it before this date you would have to cancel the policy but you are likely not given any refund because policy cancellation is usually on short period basis.
      NCD: If you have no NCD in your current policy, then you should have a 15% NCD when you renew or transfer to a new policy on or after 20th July. However if you cancel the existing policy before 20th July you may have some difficulties getting your 15% NCD simply because your policy has not completed the 12 month full cycle. By saying difficulty here does not mean you cannot get back you NCD but there are complication, i.e. you would need to buy from the existing insurer and then going back later on to have your NCD endorsed…. for NCD checks, you can try this….

      If there are more questions to ask, you can try checking this site: and call Chee Hong Moo at 012-2216168. Tell him that Malaysia Insurance Online refer the case to him….

  7. December 11, 2010 at 10:45

    looks like the insurance industry to leak more when the latest data synchronisation is done with, whatever is wrong is going to be correct if you data is already in the insurance company system and is not correct!

  8. Anonymous
    October 8, 2010 at 14:22

    Hi there,
    I’m going to buy a new car soon, however will maintain the old one. Both cars will be insured under my name. My q is What is the NCD amount tranfer to my new car if I choose to transfer it to the new car?
    Perhaps scenario below will help u to understand my q further:

    1. Old car’s NCD = 55% amount RM500
    2. New car – no NCD 0% but would like to transfer to old car.
    Say, the premium amount for my new car is RM2000, will I get NCD = 55% X RM2000 =RM1100 or just RM500 from old car NCD?

    Please advice which is the best option, to transfer my old car’s NCD to new one or to maintain it on old car?


    • October 9, 2010 at 22:05

      You are currently having a 55% NCD and attaching to your old car. When you buy the new car, it is only logical that you have the 55% NCD transferred to the new car. Thus if your new car premium is RM2000, then you need to pay your new car premium = RM900.

      On the same date of transfer, your old car will no longer with any NCD, thus your insurance company would have to pass an endorsement to the old car policy and you would have to pay the pro-rata amount of RM500 back to the insurer. Assuming at time of transfer if your old car policy is already 6 months utilised, then the pay-back would be RM250. It is also norm for you to pay back before the insurer releases the 55% NCD to your new car policy.

      It is only logical you transfer the 55% NCD to the new car because the premium of new is certain to be much higher.

      The other thing is, do make a quick check @ this site – for your NCD in case there is discrepancy somewhere…. well… things are not too stable with the current Centralised NCD database system. If there is a mistake, do get your insurer to rectify it fast before the date of the purchase of the new car.

      I hope the above answers your question.

  9. Anonymous
    October 3, 2010 at 01:57

    your attachment for download @ is not working! Kindly plug problem.

    • October 9, 2010 at 22:07

      Actually it is working, you need to register your identity and then access to the site, click on the link and then the document should appear in you computer screen.

  10. Dave
    July 1, 2010 at 23:18

    Smooth transition I supposed?

    • July 2, 2010 at 22:56

      Some bugs and some angry people…..

      • Anonymous
        September 30, 2010 at 22:26

        Sir, there is something wrong with the download link, cannot find the page!

  11. Anonymous
    June 26, 2010 at 17:34


      June 28, 2010 at 17:42


      Kindly refer to PIAM’s General Regulations No 24{b]{ii} which stated that: after the after the second year of insurance{meaning the third year} NCD should be 30%

      Hope the above clarify your misunderstanding of the NCD entilement.



      • June 28, 2010 at 21:46

        That’s why the title is about “beginning of”

      • Lim
        July 20, 2010 at 09:03

        It is after 2nd year and beginning of 3rd year, you get a 30% NCD. So there is really no issue.

  12. June 26, 2010 at 14:18

    [New Post] The New Motor No Claims Discount (NCD) practices – Consumers gains, Insurers leak? – via #twitoaster

Leave a Reply