MSE News: Consumers urged to fight rising insurance admin fees

joken1

The house hold insurance I have has told me that it will not pay the full cost to replace my fridge/freezer as to expensive but they will pay a third of the cost if I go to comet and pay £900. Are they allowed to do this as I have checked and can replace cheaper if I go elsewere< Only just renew the insurance dec 2010 ?? seems to be a major rip off

whatmichaelsays

I'm sorry, but admin fees are something that consumers, with the help of sites such as these, have brought on themselves.

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, introducing fees elsewhere 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 impact of introducing a charge is minimal to the majority of consumers.

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, such as admin or cancellation fees, are 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. You can't have websites that campaign for "consumer revenge" and not expect businesses to fight back.

dunstonh

The house hold insurance I have has told me that it will not pay the full cost to replace my fridge/freezer as to expensive but they will pay a third of the cost if I go to comet and pay £900.

You are probably best posting on your own thread rather than adding your questions to a thread with an unrelated topic to yours. When you repost your comment in your own thread, please add what the claim is for.

hasankamal

What they actually mean is "that will be an extra £10 plus a £35 administration fee for updating the details" or something along those lines

eddddy

I don't really see a problem with admin and cancellation fees as such. I think the problem is that details are often hidden in policy small print. Clearly showing fee scales alongside premium quotes (and on comparison websites) would help the purchaser make an informed choice.

For example, comparing 3 quotes:

Insurer A - Premium: £200 Changes Admin Fee: £40 Cancellation Fee: £50

Insurer B - Premium: £220 Changes Admin Fee: £10 Cancellation Fee: £20

Insurer C - Premium: £230 Changes Admin Fee: £0 Cancellation Fee: £10


The purchaser can make a decision based on their personal circumstances (i.e. the likelyhood that they might change car, change address, add/remove drivers, cancel etc during the policy year).

Conceptually, these fees are similar to early repayment charges on mortgages, and interest penalties on long term savings accounts. People accept these charges/penalties because they are clearly explained, and they factor them into their decision making process.

dunstonh

Clearly showing fee scales alongside premium quotes (and on comparison websites) would help the purchaser make an informed choice.

This issue has come about by quote comparison sites because the average consumer that uses them picks the cheapest rather than actually look at what they cover is (and what may be left out) and what the additional charges are (which are usually available to read if you look). With the focus being on premium only rather than quality or extras, it is the consumer that has driven this.

Many have called upon quote sites to give more info on quality, options and differences. However, nothing seems to change much.

Jojodear74

Hi,
My car insurance policy recently auto-renewed. Stupidly I hadn't had a chance to change my address so the renewal docs went to my old address (my fault). When i contacted Budget and found out they wanted to charge me over £1,000 for this years insurance and I decided to cancel the policy I was told there was a £75.00 fee plus interest so the total cancellation charge is £495.00!!

Now various circumstances led to this palarva including me not changing my address and being in hospital giving birth to my son hence why looking into my insurance wasn't top priority at the time. Yet the company weren't interested in doing anything for me even though i was only 2 days outside my cooling off period.

How can a car insurance company charge such a fee?? And do you have any advice as to how i can get this money back please?

Many thanks
Jo

mamazaac

Jojodear74 wrote: »

Hi,
My car insurance policy recently auto-renewed. Stupidly I hadn't had a chance to change my address so the renewal docs went to my old address (my fault). When i contacted Budget and found out they wanted to charge me over £1,000 for this years insurance and I decided to cancel the policy I was told there was a £75.00 fee plus interest so the total cancellation charge is £495.00!!

Now various circumstances led to this palarva including me not changing my address and being in hospital giving birth to my son hence why looking into my insurance wasn't top priority at the time. Yet the company weren't interested in doing anything for me even though i was only 2 days outside my cooling off period.

How can a car insurance company charge such a fee?? And do you have any advice as to how i can get this money back please?

Many thanks
Jo

This might help

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/54/insurance.htm

notamused1

In May of this year i took out a car insurance policy with Yes car insurance for my Toyota Yaris. I am a female with 20 years experience, max no claims, 3 points for a parking offence. When ensuring my Yaris i paid around £260 inclunding my partner who also has a similar driving history and no points. I paid my policy in full. I recently called to change my insurance to my new car, an Audi TT. I appreciate its a big upgrade but I was advised that due to my 3 parking points they could not insure me!! When queried the advisor was able to find me a quote which totalled £902, thats an increase of just under £650.00. What a total joke! On checking price comparisons a number, around 30, other reputable companies could offer me insurance for around £400 meaning that the Yes quote was totally uncompetative. To add insult to injury, due to the ridiculous cancellation charges I walk away with a £35 refund which means I have paid nearlly £60 per month for insurance on a 1.0 Yaris. I queried the charges due to the fact that despite the fact i didnt want to cancel, i had to because i'd be crazy to pay £902. They told me they can insure me despite the appalling rate and therefore i would have to pay like everyone else, the equally ridiculous charges. DO NOT USE THIS COMPANY!!!!!

Extravagoose

For motor insurance, I've never had any luck with admiral personally, Hastings charge £35 per edit and £55 to cancel a policy. They even managed to not record new details correctly and still charged... they refused a refund despite this and the fact that they also breached the data protection act in processing this information.

These fees are simply a disgrace with honest people being ripped off for staying legal and having valid insurance, it simply cannot cost them £35 to amend a policy... its obvious insurers are profiteering and they know they've a captive audience with motorists.

Incidentally, there is a Government e-petition calling for regulation or banning of these insurance admin fees:

epetitions.direct.gov.uk/petitions/26711

Unfortunately, because i'm so new to this site, I seem to not be allowed to post actual links incase of spam *sigh* so will have to copy and paste unless an admin edits.... despite that... might be worth signing it and passing it on. I could imagine there would be many people just as upset with these fees?