Insurance Admin costs

starrystarry

Bandageman wrote: »

Based on the fact that the person in the call centre will be on minimum wage = £6 per hour

This "fact" is incorrect for starters. How do you know the people in the call centre will be on min wage? I worked in an insurance company call centre until 4 yrs ago and I was on significantly more than min wage. I do wish people would stop assuming that all call centre work is unskilled and low paid.

magpiecottage

losgiganteskid wrote: »

You seem to have overlooked the fact that insurance is exactly that - spreading the cost across everybody !!

No its not, it is about sharing the RISK associated with an eventuality that is insured against.

Some insurers will, in effect, include the "risk" that a policyholder will need to amend their policy into the premium and thus insure all policyholders against that risk.

Others will effectively exclude it from the policy - i.e. they do not "insure" it. Provided it is disclosed at outset and is not excessive (which in the end FOS would need to adjudicate on) they can do this.

Others may want a contribution that is less than the cost - an "excess".


If a policy comes up for renewal and you simply tell the insurer/broker that you do not want to continue there should be no charge for simply lapsing it because there is no new contract for them to enforce.

dunstonh

You seem to have overlooked the fact that insurance is exactly that - spreading the cost across everybody !!

Yes. The idea is that the risk premium is spread over the pool of those insured. However, admin charges are specific.

Typically, the old way of no admin charges saw the cost of admin built into the premiums. However, we didnt have quote portal sites then. We now have the great majority picking the cheapest premium (and use no other criteria). So, the model has moved to stripping out as much as possible to reduce the premium, as already mentioned. Overall, if you dont create unplanned admin then you are better off. If you have frequent admin tasks then you are worse off.

Plus, you have a regulator that doesnt like cross subsidy on charges which can be applied explicitly, as already mentioned.