FAQ: I've been charged an admin fee on my insurance

Perhaps someone could make this a sticky. Also, thanks to everyone who contributes in the insurance forum, whose posts I have borrowed here.

Help, I've been charged an admin fee to change driver/car/address/etc on my car/home/pet/life/etc insurance
Ask the insurer to break down the fee into the admin charge and the increase in premium. This will give you a better idea of what they are actually charging you.

But they didn't tell me I'd be charged if I made a change
The fees are clearly stated in the policy booklet (which, of course, you've read) and if you bought over the phone, you may have been told the fees.

OK, so it is in the policy book but why so high?
You may just think that someone talks to you on the phone for 5 minutes, presses a few buttons and then puts a letter in the post. This simply isn't the case, think about all of these costs:

• The staff that sit there taking calls and doing the work
• The supervisors that have to monitor those staff
• The training teams that have to train the staff (including those that have to sit exams)
• The actuaries that have to factor in the cost of people making changes/cancellations
• The computer staff that have to install and maintain the computers as well as program them
• The telecommunications staff who have to install and maintain the telephones, telephone system and computer network
• The cost of buying and servicing the computers
• The storage of data which has to be indefinite now as well as recording of the call
• The cost of FSA authorisation and regulation
• FSCS and FOS levies (which can be per head on certain staff and more work means more staff)
• The cost of the building and rates
• The cost of electricity
• Postage and related costs (not just stamp but also envelope and delivery to post office plus costs of machines to print the documents plus the costs of people to maintain these machines)
• Profit (they are not a charity and are expected to make a profit)
• If you've recently made a claim then the claims department need to be informed. They must find your paper file then send a letter to third parties, third party insurers, solicitors, courts etc. This can be quite a lengthy process.

Add all this up and you'll see that £10, £15, £25+ becomes very good value for money.

Surely the charge just increases their profits?
No. Whether or not they charge an admin fee, you'll be paying for it somehow (and therefore increasing their profits). There are many insurers who don't have an admin fee, but these generally have more expensive premiums. If you know you will be making changes mid-term, then it may be worth considering an insurer who doesn't charge an admin fee.