Insurance companies Admin charges rip off

pampam

We have taken on the banks re their unfair charges now what about the insurance companies?
Kwik Fit tried to charge me £25 for change of address on Car Ins even though I told them when I took out the policy that I would be moving within the month.
I argued the point and got it reduced to a fiver.
How do they get away with it?
Very anoyed
Pam

dunstonh

Did you ask them what their charge was on change of vehicle before you did it?

Did you arrange the policy through a broker (and therefore making them aware this would happen and having the point checked and verified first) or did you arrange it yourself?

On the assumption that Kwik Fit only sell direct, then you take responsibility for choosing the provider. Therefore you are to blame I'm afraid. If you bypass the broker to save charges then you take responsibility for your choice of provider and the terms they offer.

The reason they do it is that car insurance is currently mostly loss making and as premiums have dropped, the ancillary charges have gone up.

pampam

Thanks for your reply and sorry for the delay in replying ( been ill)
The charge was for change of address, not car.
Anyway I have taken your points on board and I will bear them in mind the next time I need insurance.
Thanks and Merry Christmas
pam

Fait_accompli

dunstonh wrote:

Did you ask them what their charge was on change of vehicle before you did it?

Did you arrange the policy through a broker (and therefore making them aware this would happen and having the point checked and verified first) or did you arrange it yourself?

On the assumption that Kwik Fit only sell direct, then you take responsibility for choosing the provider. Therefore you are to blame I'm afraid. If you bypass the broker to save charges then you take responsibility for your choice of provider and the terms they offer.

The reason they do it is that car insurance is currently mostly loss making and as premiums have dropped, the ancillary charges have gone up.

Surely this 'admin' charge should challenged as it is similar to the legal stance against bank charges, ie; it doesn't cost insurance company X 45 pounds to cancel a policy?

Just because it's stated in the terms and conditions that 45 pounds will be charged doesn't mean it's just and lawful.

raskazz

Fait_accompli wrote:

Surely this 'admin' charge should challenged as it is similar to the legal stance against bank charges, ie; it doesn't cost insurance company X 45 pounds to cancel a policy?

Just because it's stated in the terms and conditions that 45 pounds will be charged doesn't mean it's just and lawful.

I'm fairly sure that it is not legally related to the issue of bank charges, as insurance fees are for amendments to the policy rather than due to breaches.

That said, Insurance Conduct of Business rules (ICOB) state:

"Guidance on Excessive Charges

ICOB 2.10.2G provides guidance on matters firms should consider on excessive charges. This guidance states that in determining whether a charge is excessive, you need to consider:

* the amount of the charge compared with similar charges elsewhere in the market;
* the degree to which the charge is an abuse of the trust the retail customer has put in the intermediary; and
* the nature and extent of the disclosure to the retail customer.

The rule on excessive charges applies to charges made on top of premiums. So, it does not cover commission which is paid out of the premium."

And:

"ICOB 4.2.15 R requires an intermediary to disclose details of fees before the customer is liable to pay them, or before the conclusion of contract, whichever is the earlier. Therefore you must provide the customer with details of your fees before this point. This includes any fees for mid-term adjustments."

dunstonh

But is it excessive. Yes, a lot of it is computerised but then you have to pay for those computers, the electricity, the staff (training and wages), the underwriters, the admin etc.

In the past, this was absorbed into the insurance premium and averaged out over everyone. However, these days the insurance premium is just that. It is not for making changes to the policy mid year. This is why car insurance is much cheaper than it used to be (in real terms).

Debt-Free_2

Hi
Well this is another symptom of Rip-Off Britain I suppose. In my case I phone Budget today regarding amending my policy in regards to my roof area, in which I throught that no more then half of the roof area of my property is flat, but after looking at it again, I am not so sure. Saying that short of actually measuring the area, it is impossible to say with any confidence., so is a difficult question to answer.

The problem is that for the privilege they want £20.00 to amend, or £55.00 to cancel the policy, which is ridiculous, and I will certainly argue with them about this excessive charge which is unreasonable.

But I only have myself to blame for this, and will be careful not to make the same mistake again.

Best Regards
William

antwilson

Try beating £500 for change of address, not so much admin charges but still:eek:

Astaroth

dunstonh wrote:

In the past, this was absorbed into the insurance premium and averaged out over everyone. However, these days the insurance premium is just that. It is not for making changes to the policy mid year. This is why car insurance is much cheaper than it used to be (in real terms).

Have to disagree with you (a rarety). In all the insurers I have worked for they have always charged admin fees to customers for making amendments. Prior to ICOB though there was no requirement for them to serperate our premiums from fees and therefore when you called to do a CoA you were told that it was £30 more... what you werent told is that it is £5 additional premium and £25 admin fee.

The ICOB rules have simply made the admin fees more transparent (which is what they were introduced to do) and have arguably reduced the fees paid as many insurers would have done the above example prior to ICOB where as many now waive them as standard for such a small AP as it is clearly going to put them in a poor light.


To the OP, the difference between these charges and the bank fees is the bank fees are ones that are applied for breach of contract which under contract law states can only represent costs incurred. The costs for insurance changes are not breach of contract and therefore are not governed my contract law other than they must be clearly communicated in the contract.

There is a very unsurprising correlation between low premiums and high admin fees - people really should look at the "complete package" that they are getting and the likely long term cost of their choices and not the immediate premium