Yes the loyalty discount sounds like it is a top up to the no claims discount. Obviously designed to both reward a loyal customer and to put them off claiming at the same time. I suppose a good customer to an Insurance company is one that reliably pays their premiums but never makes a claim.
I think you have a point here. Unless the loyalty discount is defined in the policy wording in a way that make it acceptable to be described in this way, the FSA may have some concern here. As you say it would be wrong of Insurers to say you were not loyal if you had to make a claim. That it what Insurance is for. They should really change the name to ' no claims discount loyalty top up' or similar.
You could if you wanted make a complaint to the FSA and see if this is something they would look into.
Huckster