No-claim healthy means wealthy

ALLIED Dunbar has joined the small number of insurers that offer no-claims reductions on private medical insurance.

Since 1 October new policyholders with Allied Dunbar private medical insurance will be starting out with a 27.5 per cent discount on their premiums. A family of four with both parents aged 35 will pay pounds 72.24 a month for comprehensive cover in middle-range hospitals. If there are no claims the discount will grow to a maximum of 50 per cent over four years.

If the family makes a claim during the first year, its discount in the following year will be reduced by 10 per cent. If it claims again in the second year of cover it will pay the full price in year three. The maximum discount is 50 per cent after four years.

No-claims discounts have been 'perceived as slightly immoral in healthcare', according to a BUPA spokeswoman, because they might discourage people from seeking medical treatment when they need it.

Allied Dunbar used to operate a 'loyalty bonus', where a small discount was given from the second annual renewal. But as small claims increased, premiums went up so much that the value of the bonus was lost.

With a no-claims discount small claims are discouraged, though there is the problem of explaining a sharp hike in premiums to the long-term sick who may be obliged to claim several times.

Insurers say that a typical policyholder claims on average every five years.

PPP offers a starting discount of 20 per cent on policies bought through brokers, going up to a maximum of 50 per cent after five years. The same family would pay pounds 77.20 a month for middle-range hospitals under its Executive Cover plan.

Even BUPA, the market leader, is looking at giving some sort of reward for no or low claims. It expects to come up with 'something different' over the next six to nine months.