MSE News: Consumers urged to fight rising insurance admin fees

dunstonh

So: 'Consumers urged to fight rising insurance admin fees'

But how?

Best way is to pay a higher annual premium instead.

Price comparison websites of the type championed on this site are a big part of the problem. Having lured customers in with a lower premium, insurance companies feel it is their right to make more money off the customers they are able to trap into paying fees.

Spot on for the cause. The focus now is lower premium and make the money through bolt on sales and administration charges.

The problem is clear enough. What is the solution?

I dont see it as a problem. You pay your money and you take your choice. Either you go with a higher premium and lower servicing charges or vice versa. If there is a problem then its quote sites not showing a breakdown of key charges. Maybe they ought to be forced to show a sample of three charges in addition to the premium. i.e. admin charge for change of address, change of car and cancellation. Make the information more visual.

MORPH3US

dunstonh wrote: »

Best way is to pay a higher annual premium instead.

Is that statement missing a smiley to indicate "tongue in cheek" or are you serious?

dunstonh

MORPH3US wrote: »

Is that statement missing a smiley to indicate "tongue in cheek" or are you serious?

Yes, i should add a smiley - indeed, I will do that now.

afwone

dunstonh wrote: »

If there is a problem then its quote sites not showing a breakdown of key charges. Maybe they ought to be forced to show a sample of three charges in addition to the premium. i.e. admin charge for change of address, change of car and cancellation. Make the information more visual.

I could go along with this as a solution, though ultimately the insurance companies have got to take responsibility. Their policy and practice with fees is not transparent, and I expect that the comparison sites would struggle to obtain the information (I know I do looking at the reams of terms and conditions on my policies).

The other way is for good practice to be forced on the insurance industry.

The present situation is not good for the customer (or at least for those trapped into paying fees), and it cannot be good for insurance companies to have such low levels of customer satisfaction.

dacouch

I wonder if when you were obtaining a quote at some part of the quote a small window opened that briefly stated in a clear way that if you make an adjustment to the policy you would be liable for an admin fee of say £25 and for cancellations it showed the charges which you had to click to accept you had read. What effect it would make on people taking cover out.

Currently all Insurers state their charges in their Terms and Conditions with many of them forcing the customer to click a box to confirm they have read them. Unfortunately a large amount of customers do not read the terms and conditions

mrstt

I have just cancelled my car insurance with IbuyEco as I have bought a new car and their quote was double others I had. It was 16 days after my policy had renewed (been with them for just over 2 years). The policy amount was £346. They have advised me I need to pay £38 cancellation fee in addition to a £98.39 fee representing their % of annual cost so £136.89 in total. This seems extortionate to me for 16 days insurance. Can anyone give me some advice?
Thanks!

olly300

MORPH3US wrote: »

Is that statement missing a smiley to indicate "tongue in cheek" or are you serious?

I always phone them up and ask them what the admin fee is for changes.

dunstonh

This seems extortionate to me for 16 days insurance. Can anyone give me some advice?

It wont be 16 days of insurance though. It will be rounded to the nearest future cancellation point, which could be 30-90 days. Then the admin charge added on top. It looks like its closer to around 90 days worth.

mrstt

I still think it's extortionate that they are able to charge nearly half of the premium for cancelling after 16 days. In addition they have already had one monthly payment of £28. The article said the Ombudsman says all charges must reflect costs; this blatantly doesn't.

I signed up with Ibuyeco online and received my insurance certificate in the post but nothing else - apparently the policy is online and these charges are stated in there - I have been naive not to check out the small print - having previously been insured with larger companies I have never had a problem if I've needed to cancel - a cancellation fee yes, but not having to pay for cover I haven't used.

dunstonh

I still think it's extortionate that they are able to charge nearly half of the premium for cancelling after 16 days.

I make it 28%. Thats a fair way from the 50% you claim.

The article said the Ombudsman says all charges must reflect costs; this blatantly doesn't.

The biggest retail cost is setting up the insurance policy. This is why early day penalties are higher than later on the policy year. Also, with car insurance, there is a bit of a deterrent in there to prevent people using annual policies to pay for short term car insurance. Indeed, some companies will charge you the equivalent if you had been on a short term car insurance policy.

I have been naive not to check out the small print

if you bypass the broker/adviser then its your responsibility to know what you are buying.

having previously been insured with larger companies I have never had a problem if I've needed to cancel - a cancellation fee yes, but not having to pay for cover I haven't used.

Have you made a habit of cancelling in the early months? Most will have a refund structure that has a heavier penalty up front. Not all but if you are doing this often then you may wish to change the way you research when you buy or use a broker and give them the instruction that it should not have high front end cancellation clauses.

Also remember that if they are cheap, then think why are they cheap? There is often a good reason why a certain policy is cheap compared to others. What they are doing to allow them to be cheaper? Are they leaving things off cover or do they have higher charges for other services or cancellation.