admin charges on insurance

scaitcliffe

My husband recently changed his motorbike mid way through his yearly policy and was charged £38.68 additional premium and then £30.80 administration fee. I have spoken to friends who have also been charged admin fees and all seem to be different prices. How are they getting away with this? everyone is claiming back bank charges so how is this any different? We're being robbed once again!:mad:

olly300

An insurance policy is a 12 month contract.

Insurance companies for many reasons like the competitive market and their regulator, the FSA, now do not load all possible admin charges on to their policies.

This means those who don't make changes to their policies are not subsiding those who do.

So if you decide to change the policy during the 12 months for any reason then you have to pay your admin charges plus any costs associated with the changes in insurance.

All companies put the range of charges in their policy booklets. Many of these booklets can actually be downloaded from the web. If you can't be bothered to do this or can't find them, there is nothing stopping you for working out what kind of changes you are likely to make in the 12 months the contract runs i.e. you have an old vehicle that may not get through it's MOT, you are likely to move, and ask the insurance staff on the phone.

When I take out in insurance I always ask the range of charges due to my likely circumstances in the year, and have taken out slightly more expensive insurance because for example if I know I'm likely to move in a year if changing my address with one company will cost £30 but with another one will cost me £0, then to pay £20 extra for the second policy is cheaper.

In short the charges are legal and fair. The charges are also easy to understand unlike bank charges and so are their t&c unlike most banks t&c.

Quote

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TheRedAdmiral

Forget whats in the Policy Booklet.

A charge of £30 for pressing a couple of buttons, and altering the vehicle on screen, cannot reasonably reflect the amount of time spent in processing that change.

_Andy_

Presumably then you'd be happy with no admin fees but raised premiums?

raskazz

TheRedAdmiral wrote: »

Forget whats in the Policy Booklet.

A charge of £30 for pressing a couple of buttons, and altering the vehicle on screen, cannot reasonably reflect the amount of time spent in processing that change.

Unless you understand basic economic theory.

dunstonh

How are they getting away with this?

Because the charge is legal and understandable.

A charge of £30 for pressing a couple of buttons, and altering the vehicle on screen, cannot reasonably reflect the amount of time spent in processing that change.

The transaction itself may not cost £30 but you have to consider the costs involved that allow the transaction to be done as cheaply. You also forget that the pricing does look at the average. Some people may be on the phone 20 minutes, others 5 minutes. Not all amendments are so easy. So, a flat fee is the realistic way of pricing it.

If you dont want an admin fee then go with an insurer that does not charge one. However, generically you would expect the premium to be higher as the factor the cost of admin into the annual premium so everyone pays it. Perhaps you prefer it that way?

scaitcliffe

Thank you for all your interesting replies. Don't mind paying a small standard charge, but think £30 was excessive! How much wasted money does it cost when they send you several letters to try and get you to renew your policy at the end of the year?

frugallass

Had to cancel my car insurance because it failed the MOT and will now be scrapped - Direct Line are going to charge me £35 for the privilege of doing this - having another policy with them makes no difference.

They have requested that we send our documents back to them, which we will do of course, but no stamp will be going on the envelope haha, and maybe I should charge them my own admin fee for returning the docs

I agree that the charges are excessive

Proc

I think it's about time we made a sticky thread entitled "YES INSURANCE COMPANIES CHARGE ADMIN FEES" with the reasoning for it in the thread.

You guys must be sick to death of explaining the same crap to a different set of idiots each week.

frugallass

Proc wrote: »

You guys must be sick to death of explaining the same crap to a different set of idiots each week.

charming !