£14.50 admin fee to change address with top insurer!!!

dunstonh

FlameCloud wrote: »

I have a feeling I was being to subtle

I got it.

I dont think Jack did.

Car insurance has been loss making for ages. The model of setting up new companies, heavily promoting the brand, and then selling them on hasnt helped. Nor has the fact that its volume business that some insurers want to keep the shareholders happy for turnover figures and then use other parts of the business to turn the profit in (i.e. cross subsidise).

There has been a fair bit of coverage recently on how insurers are starting to withdraw from business that is not profitable and move away from volume and focus on quality. Personally, i have heard that before and seen the likes of Aviva say it, act on it and then backtrack later when the amount of business they lose is more than they thought. It needs the majority to do it and that just doesnt happen.

jack_spratt_2

There has been a fair bit of coverage recently on how insurers are starting to withdraw from business that is not profitable and move away from volume

That has always been the case !! insurers control the type of business they acquire by setting the premium for that underwriting risk

some insurers want to keep the shareholders happy for turnover figures and then use other parts of the business to turn the profit in (i.e. cross subsidise).

A shareholder is happy when a decent dividend is paid and the share price goes up as i am sure you know
If a business runs a arm of there business at a loss it is for a very good reason the general side of the business has always complained for years that they are running at a loss

I dont think Jack did.

Can you read my mind then !! quite useful for an IFA

lisyloo

The costs of admin charges have to paid for somewhere.
The old fashioned model would be to charge everyone upfront. This way "stable" customers subside more mobile one.
The new model is to get premiums as cheap as possible and charge those who need it for extra services (call it the "ryan air model"). In general the Bristish public have flocked to this in droves searching for the cheapest up front premiums in the same way they go for cheap no frills flights, regardless of quality.

Personally I think the latter model is fairer.
As a "stable" person who sticks with the same home, marriage, vehicle etc. then I don't see why I should subsidise others.

Regardless of my prefrences (or yours), we don't get to chose the business model of private businesses. If you aren't satisfied then go to a different insurer, preferably after reading the terms and conditions up front (it's easier to decide not to take a policy than to change your mind later on).

dunstonh

That has always been the case !! insurers control the type of business they acquire by setting the premium for that underwriting risk

No it hasnt. For years insurers bought volume and market share. Now some are looking at value rather than volume. Nothing to do with costing the actual risk premium.

A shareholder is happy when a decent dividend is paid and the share price goes up as i am sure you know
If a business runs a arm of there business at a loss it is for a very good reason the general side of the business has always complained for years that they are running at a loss

Major shareholders like good news across all areas. Increasing market share is a popular one.

Can you read my mind then !! quite useful for an IFA

You did thank Flamecloud despite the sarcasm against you.

jack_spratt_2

No it hasnt. For years insurers bought volume and market share. Now some are looking at value rather than volume. Nothing to do with costing the actual risk premium.

Sorry Dunstonh I do not agree with you !! insurance companies control the type of risk they wish to take on by charging a premium to attract or discourage a type of customer they want that has always been so

Major shareholders like good news across all areas. Increasing market share is a popular one.

So shareholders are happy if the share price goes down and the dividends they receive were poor as long as the market share is good .
If a company is losing money on a particular side of the business are you saying shareholders want a bigger market share of that business to lose more money ??? I do know its always the bottom line that counts and your suggestion that companies are moving away from volume to quality supports my statement

You did thank Flamecloud despite the sarcasm against you.

Perhaps it was in response to his sarcasm;)

dunstonh

Sorry Dunstonh I do not agree with you !! insurance companies control the type of risk they wish to take on by charging a premium to attract or discourage a type of customer they want that has always been so

You are talking about the risk premium. You need to factor in the marketing people into that as well who will take that risk premium and discount it or load it depending on what they are trying to achieve. The marketing departments of insurers have wielded a lot of power for far too long and that has resulted in big losses at times.

So shareholders are happy if the share price goes down and the dividends they receive were poor as long as the market share is good .
If a company is losing money on a particular side of the business are you saying shareholders want a bigger market share of that business to lose more money ??? I do know its always the bottom line that counts and your suggestion that companies are moving away from volume to quality supports my statement

Shareholders dont just look at one thing. That would be foolish. Market share is one of the things. Dividend and share prices are another. Profitability etc etc etc

Perhaps it was in response to his sarcasm;)

perhaps there was no sarcasm and I am wrong!

woodvale_2

When I was working in the field of motor insurance such fees were considered good profits, whenever making any policy adjustment we were informed to add extra charges to the additional premium.

The cost of producing new documents is automated and minimal and in reality pointless, have you ever seen an address on a cerificate of insurance anyway ? There is not really any need to produce a new schedule just for a COA, after all other companies such as utilities manage just to change their computer records.

I am afraid to say that based on my experience that this is just a way of insurers and brokers alike trying to bump up their profits or reduce their losses.

If you don't like it then complain, most of the time they will delete the charge becuase they know it costs them a lot less to keep an existing customer than to attract a new one.

jack_spratt_2

I do agree with you in parts and I did say its the bottom line that counts !!

Banks have been famous for selling a loss leading product and then cross sell other more profitable products at the same time .

dacouch

woodvale wrote: »

When I was working in the field of motor insurance such fees were considered good profits, whenever making any policy adjustment we were informed to add extra charges to the additional premium.

The cost of producing new documents is automated and minimal and in reality pointless, have you ever seen an address on a cerificate of insurance anyway ? There is not really any need to produce a new schedule just for a COA, after all other companies such as utilities manage just to change their computer records.

I am afraid to say that based on my experience that this is just a way of insurers and brokers alike trying to bump up their profits or reduce their losses.

If you don't like it then complain, most of the time they will delete the charge becuase they know it costs them a lot less to keep an existing customer than to attract a new one.

Things have changed a lot since you worked in the industry thanks to the FSA

dunstonh

When I was working in the field of motor insurance such fees were considered good profits, whenever making any policy adjustment we were informed to add extra charges to the additional premium.

You cannot get away with that sort of thing now. You have to have published charges and be able to give full disclosure.

I am afraid to say that based on my experience that this is just a way of insurers and brokers alike trying to bump up their profits or reduce their losses.

That is part of the reason but there is nothing wrong with that. However, the point that has been made a number of times is that insurers have been working on ways to reduce the annual premium to appear better priced and moving fees off the premium and charge them when admin occurs is one way to look better on price comparison lists.