No Claim Discount (NCD) is a discount given by insurance companies for not making any claims during the policy period. It’s a way to incentivize safe and responsible driving. The NCD is usually represented as a percentage and is applied to the renewal premium of the insurance policy. Here’s an example to illustrate how NCD works:

Let’s say you have a car insurance policy and during the policy term (usually 1 year), you haven’t made any claims. At the time of renewal, the insurance company may offer you an NCD of 20% for your next policy term. Here’s how the premium calculation might work:

• Current Insurance Premium: RM 1,000 (without NCD)
• NCD Percentage: 20%
• NCD Discount: 20% of RM 1,000 = RM 200
• Premium for Next Policy Term: RM 1,000 – RM 200 = RM 800

So, with a 20% NCD, your insurance premium for the next policy term would be RM 800 instead of RM 1,000.

The NCD percentage increases with each claim-free year, typically up to a certain maximum, offering higher discounts on the premium. The NCD rates for private cars, motorcycles, and commercial vehicles are as follows:

No-Claim Period	Private Car	Motorcycle	Commercial Vehicle
1st year	0%	0%	0%
2nd year	25%	15%	15%
3rd year	30%	20%	20%
4th year	38.33%	25%	25%
5th year	45%	25%	25%
6th year onwards	55%	25%	25%

However, if you make a claim during a policy term, your NCD may be reduced in the subsequent policy term, leading to a lower NCD discount and a higher premium. It’s important to maintain safe driving practices to maximize and retain your NCD, resulting in lower insurance premiums over time.