Provisional to Full UK insurance premium?

Joe_Horner

Thanks, Mikey, not sure how I'd managed to miss that one along the way

raskazz

Joe_Horner wrote: »

I guess you didn't read this paragraph before jumping on the "post" button?



There's no problem with them increasing the premium.

Where there is a problem is with them increasing the premium, by an amount that they can't specify at the start of the contract, without allowing you to cancel without penalty at that point.

Can you please provide a source from the FSA/FOS to validate this assertion?

raskazz

mikey72 wrote: »

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

mikey72 wrote: »

No grey area on short term rates I'm pleased to say.
They can try it on, but they know it's not allowed.

Roughly a pro rata premium, plus a cancellation fee of up to £50 is considered fair, as per the link to the FOS ruling above.

It is a very useful link but I wish you would stop mispresenting what that link actually says. Nowhere in that link does it say that short-term rates are "not allowed", what it says is:

"The FSA statement specifically refers to terms that charge policyholders a disproportionately large sum if they do not fulfil their obligations under a contract, or if they cancel it. We share the view that giving consumers the right to cancel – and then penalising them financially for exercising that right – is likely to be unenforceable in law, as well as unfair and unreasonable.In cases referred to us, if a customer has cancelled a policy and received a significantly smaller refund of premiums than could be expected as a pro rata settlement, we will ask the firm to explain how its approach complies with the requirements under the regulations.

It is not usually unreasonable for the firm to recover any additional administrative costs it incurs. Nor is it usually unreasonable for its charge to reflect the costs it necessarily incurred in setting up the policy – and that will not now be spread over the assumed lifetime of the insurance.
Similarly, the provision that premiums for an annual contract are not refundable if a claim has been paid does not appear to be unfair.


We recognise that there may also be seasonal or other features of the policy which could justify different approaches to refunds. And we recognise the more fundamental point that under some policies, both the risk and the insurer’s potential liability may be higher at the outset of the policy than at the end – so the premium calculation will reflect this.
But in any event, it is important for the firm to have fair reasons for its approach to premium refunds – and for it to explain its approach clearly to the customer."

For example, the emboldened text would apply to mileage rated classic car policies where short-term rates are applied to prevent an individual taking a policy out in April, using up their annual mileage entitlement then cancelling in September when the season ends.

As another example, if a short-term rate was applied but no cancellation fee, this could work out to be be a greater refund to the client than pro-rata plus an admin fee; so it is hard to imagine that the FOS would uphold a complaint in such circumstances.

Joe_Horner

raskazz wrote: »

Can you please provide a source from the FSA/FOS to validate this assertion?

Happy to - may take me a little while though because I've changed laptops twice recently and the relevant refs (to statute as well as FSA iirc) will be buried in a back-up somewhere.

But please be assured that your query is important to me and I'll be with you as soon as possible. Please hold......

raskazz

Joe_Horner wrote: »

Happy to - may take me a little while though because I've changed laptops twice recently and the relevant refs (to statute as well as FSA iirc) will be buried in a back-up somewhere.

But please be assured that your query is important to me and I'll be with you as soon as possible. Please hold......

I won't be holding my breath to be honest.

Joe_Horner

raskazz wrote: »

Can you please provide a source from the FSA/FOS to validate this assertion?

raskazz wrote: »

I won't be holding my breath to be honest.

Ok, we can start with this from the OFT. I'll get onto the Regulations and FSA stuff tomorrow for you:

https://www.oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft311part2.pdf

Note Group 12, Price Variation Clauses:

Any purely discretionary right to set or vary a price after the consumer has become bound to pay is obviously objectionable..... It also applies to rights to increase payments under continuing contracts where consumers are 'captive' – that is, they have no penalty-free right to cancel.

A price variation clause is not necessarily fair just because is not discretionary – for example, a right to increase prices to cover increased costs [or, logically, risks] experienced by the supplier..... In any case, such a clause is particularly open to abuse, because consumers can have no reasonable certainty that the increases imposed on them actually match net cost increases.

A degree of flexibility in pricing may be achieved fairly in the following
ways.30
• Where the level and timing of any price increases are specified (within narrow limits if not precisely) they effectively form part of the agreed price. As such they are acceptable, provided the details are clearly and adequately drawn to the consumer's attention.
...
• Any kind of variation clause may in principle be fair if consumers are free to escape its effects by ending the contract. To be genuinely free to cancel, they must not be left worse off for having entered the contract, whether by experiencing financial loss (for example, forfeiture of a prepayment) or serious inconvenience, or any other adverse consequences.

misssmcc

Wow. You lot have turned my thread into a kind of Ally McBeal rerun.

mikey72

You're doing well.
Usually it's more like a re-run of "Mortal Kombat" mixed with "Streetfighter"

forgotmyname

Before i would have thought £244 would be the costs to change details and risk but these days i wouldnt be surprised if the £68 was going to change to £244 a month to finish the policy, Have you contacted them yet?

misssmcc

forgotmyname wrote: »

Before i would have thought £244 would be the costs to change details and risk but these days i wouldnt be surprised if the £68 was going to change to £244 a month to finish the policy, Have you contacted them yet?

Not yet, will do soon. Hoping its not going to be £244 a month, that would be ridiculous.