The future of no claims bonus

Document description

This is a discussion paper for a bonus workshop, to stimulate discussion of practical issues affecting the use of no claims bonus today. There is no discussion of detailed technical issues. The paper initially looks at the present use of bonus and the variations present in the current UK market. It then introduces two different bonus systems similar to those used presently in Europe: one based on similar principles, but with a much longer timescale; and one in which claim penalties are applied by means of higher excess rather than higher premium. Finally the paper considers technical developments currently in progress in the UK and asks whether these may eventually lead to sufficient improvements in the quality and security of direct claim experience rating to render bonus as we know it no longer necessary.