Private Medical Insurance — Explained
What is a protected no claims discount?
A no claims discount (NCD) is a feature of private medical insurance (PMI) that reduces your premium when you have not made a claim during a policy year. A protected no claims discount is an optional add-on that preserves that discount level in the event that a claim is made.
Understanding how PMI NCD works is important — because it operates in the opposite direction to motor or home insurance, and the rules around protection are more specific than many people expect.
WHAT IS IT?
No claims discount at a glance
In private medical insurance, your no claims discount does not build up over time in the way it does with car or home insurance. Instead, PMI policies start at the maximum NCD level from day one. A new policyholder with no claims history automatically receives the highest available discount — there is no waiting period or accumulation process.
Claims erode that discount downward. Each claim made during a policy year reduces the NCD level at renewal, which results in a higher premium the following year. The longer a policyholder goes without claiming, the more their NCD level recovers — but the starting point is always the top, not the bottom.
Protected NCD is currently available on policies from Aviva and The Exeter only. It is not offered by all PMI providers, so its availability — or absence — is worth considering when choosing or switching a policy.
When protected NCD is added to a policy, an additional premium is charged. If a claim is made during that policy year, the NCD level is preserved and does not drop at renewal. However, the protection itself is removed at that renewal — it does not carry forward automatically. To add protected NCD back onto the policy, the policyholder must complete twelve consecutive claim-free months first.
IN PLAIN ENGLISH
Unlike car insurance, your PMI no claims discount starts at the maximum level and goes down when you claim — not up over time. Protected NCD means a claim won't reduce your discount, but the protection is removed after you use it and can only be reinstated after a claim-free year.
How it fits into your policy
No claims discount is one of the factors that affects your renewal premium each year. If you have made claims during the policy year, your NCD level will typically fall at renewal — meaning your premium increases beyond the standard annual rate adjustment.
Protected NCD limits the financial impact of claiming by keeping the discount in place. For policyholders who use their cover regularly, or who have a lower NCD level following a previous claim, protection can provide a degree of cost certainty at renewal.
It is worth understanding that the cost of protected NCD is always marginally higher in the long run than having never needed to use it — the additional protection premium is paid, the protection is then removed after a claim, and the premium is naturally higher in the period before protection can be reinstated. The value is in the certainty it provides, not in producing a financial saving over the life of a policy.
For clients switching away from Aviva or The Exeter to a provider that does not offer protected NCD, the loss of this feature should be considered alongside any other benefit changes — though in many cases the wider improvements available on alternative policies will outweigh the absence of NCD protection.
What's typically included
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Maximum NCD applied from policy inception (no build-up period)
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NCD preservation following a claim in the policy year
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Renewal premium unaffected by claim activity (while protection is in place)
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Available as an optional add-on on Aviva and The Exeter policies
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Reinstatement available after 12 consecutive claim-free months following use