£40 'admin fee' from Swinton, to change vehicles on policy?

emilyteach1

Hello all,

Sorry if this sounds a bit amateurish, but I was wondering about an admin fee Swinton just made me cough up for, for changing my vehicle on my policy.

I'd been driving the same car for years, and had made no amendments to the policy; other than annual renewals; for its duration, but I just bought a new car and changed the vehicle on my policy today.

I'm in the middle of my annual policy, and I pay monthly. The cars are of similar spec and age, so the premium remains the same, but I had to make an immediate card payment of just under £40 to change vehicles. This was described as a combination of admin fees, and the fee Swinton supposedly pays to my insurer.

Is this normal? Having never made a change like this, I've never paid such a charge, and I was a bit miffed by it!

Thanks x

dogbot

Yes it is. There is work to be done that they would otherwise not have had to do. Provided the charge was publisised before you purchased - in the policy and/or key facts document for example - then they can charge it.

Admin charges up to £50 are normal

emilyteach1

dogbot wrote: »

Yes it is. There is work to be done that they would otherwise not have had to do. Provided the charge was publisised before you purchased - in the policy and/or key facts document for example - then they can charge it.

Admin charges up to £50 are normal

Thanks dogbot, as long as it's commonplace and justifiable then I don't really object, but I got the sense I was being taken to the cleaners at the time. Especially when I was offered so-called 'great deals' on breakdown cover, a personal accident plan, and home insurance all on the same call .

dogbot

Sadly, Swintons don't have the best rep for customer service or charges - £40 is higher than most might charge. However, they are a broker not an insurer, so there may be a charge from the insurer too within that. As you have experienced, Swinton's branches try as much as they can to upsell and cross sell which for some can be annoying.

It is always worth challenging admin charges, since if you might be a loyal customer they will take the hit as a business decision.

They are justified, or rather justifyable if you will. If you make a change to your policy, you are asking to change the basis of an annual contract, others go the whole year without a change. So usualy those who make changes are chaged and those who don't are not.

There is administrative work to be done - yes it is "pressing of buttons" but that is still time of someones day - adding up all those 5 or 10 minuits accross a large company equates to several people dealing with such quiries every day. Not only that, but some of those changes won't take 10 minuits, they will take half a day - just because that is what happens somethimes. As you purchased though a broker there is also probably a software house involved (depends on the swinton product you bought) who charge a transaction fee each time something happens to a policy (new business, renewal, MTA). This is not a small charge and has to be met somewhere.

Horlock

What is done is done, but you may well have found it cheaper to cancel the policy and go elsewhere - you would have lost half a years no claims bonus but if you've already got 5 years or so you may well have done better - even just telling them that that was your intention may well have been enough for them to suddenly "forget" about the £40

foggytown

emilyteach1 wrote: »

Thanks dogbot, as long as it's commonplace and justifiable then I don't really object, but I got the sense I was being taken to the cleaners at the time.

And so you were! Commonplace it may be, but justifiable? I've had conversations over the last few years with some very knowledgeable people within the industry.

What has happened is that some insurers, looking for ways to make their premiums more competitive, hit upon another sleight-of-hand numbers game. (The following are scaled down and for illustrative purposes only.)

Assume: one insurer with (say) 10,000 policyholders and (say) £250K premium inome

Now, over the last three years they have seen an average of (say) 2,500 customer-driven activities requiring amendments, endorsements, or other administrative activities (change of name, change of vehicke, cancellation, re-issue of lost cover note, etc., etc.)

Insurer then estimates/calculates that all of these maintenance activities cost them (say) £10 per item = £25K.

Arbitrarily doubles that to £50,000 so that the cost per item is now a notional £20.

Knowing that the average number of activities will be about the same next year (2,500) this means that if the insurer charges every policyholder £20 for each activity, they will be getting back about £50K.

This means that they can use all or part of the extra £25K to subsidise next year's target premium so that rates can be maintained or even reduced.

Some will say "This is good! This is fair!" because only those causing the extra activities will be paying for them. Very true, but also contrary to the founding principles of insurance. The concept was that losses and costs would be absorbed a large pool of insureds so that those without losses, in effect, subsidised those that had losses.

dunstonh

Some will say "This is good! This is fair!" because only those causing the extra activities will be paying for them. Very true, but also contrary to the founding principles of insurance. The concept was that losses and costs would be absorbed a large pool of insureds so that those without losses, in effect, subsidised those that had losses.

The FSA is partly to blame for the shift as well as quote portals focusing on just the premium. The FSA doesn't like cross subsidy and prefers explicit charging. Which as you say, isnt what insurance is all about.

Starrystarrynight

I paid £35 to change the car on my policy with Zurich, no broker involved as it was done direct. I understand that there must be costs involved, but I'm sure it won't be several hours of someone's work time to do it.

dunstonh

I understand that there must be costs involved, but I'm sure it won't be several hours of someone's work time to do it.

You are not paying for the time though. You are paying for all the people involved and facilities and liability (and re-work no doubt with some of the lower quality ones) and some profit. For every front line person there are around 3-5 behind the scenes. Plus, there is a bit of averaging. One call may last 5 minutes but another may last 20 minutes.

whatmichaelsays

This has been done countless times on many other discussions.

Here's my twopenneth on it (lifted from another discussion)

These charges are simply about businesses reacting to the demands that we the public make.

The reality is that the public's insatiable desire to have everything "as cheaply as possible" means that companies are constantly having to look at bringing in ancillary charges or removing "free" services in order to make their headline price seem more competitive. There's big kudos in coming out on top in a Confused or Gocompare search and if you can do that by stripping out services, increasing excesses or generally cutting costs, then firms will do it.

We have seen it most overtly in the airline industry and we are seeing it creeping in to other industries (more and more firms are charging surcharges for credit cards for instance). Where a company may have changed an address / car for free in the past, the pressure to bring the headline price down to the bare bottom means that those services get removed from the standard package. Very few people will want to change an address so the negative impact of introducing a charge is minimal.

Insurance is a competitive, cut-throat industry and the margins have been shrunk dramatically. Five-ten years ago, insurers made little profit from a customer in Y1, making it up in Y2. Today, with many of us changing insurer every year (not forgetting the Quidco kick-back), firms are having to change that business model to make as much as possible in Y1 whilst still keeping the headline price low. Ancillary charges is one way of doing just that.

At the end of the day, businesses are simply reacting to consumer demand and at the moments, our demands are almost entirely price driven.