I've had exactly the opposite happen, after 6 months on a policy, I took out a new policy with the same insurer and they gave me the full year NCB.
Nope, not to third parties, they can still claim off the insurer. The insurer must void the policy and remove their name off MID before the claim occurs.
https://www.midportal.org.uk
This is why fraudulent insurance policies are so bad. The insurer still has to pay out for third party damage and injury claims. It is their duty to spot fraudulent policies and void them in time.
That's crazy
But the driver and owner of the other car should have their own policy no?
They might not. Even if they do, no guarantee it won't be voided because so many people lie to their insurers these days. If it's an expensive claim I can guarantee you they'll try find a way to void it so that the first insurer is left holding the bag (or at least sharing costs, since you both voided).