MSE News: Beware sky-high insurance change fees

dunstonh

Arg wrote: »

Or they could just stop using it as an excuse to rip people off.

Premiums for most people are still very low in historic real terms. So, how are they ripping people off?

weejonnie

dunstonh wrote: »

Premiums for most people are still very low in historic real terms. So, how are they ripping people off?

No - the rip off isn't the insurance premiums - it is the costs that are imposed for administering the policy i.e. making an MTA or cancelling it.

We are rapidly entering a phase where the basic insurance will cost very little, but the companies will charge a lot where they can for administering it (Just remember that when you buy a policy you are pretty well stuck with it for a year (especially if there are high cancellation fees!) and hence at the tender mercy of the insurer/ broker for that period.)

Admiral is quoted as being very expensive - and by chance they are one company that makes a profit on motor insurance - 90% insurers are making a loss.

wozearly

Taiko wrote: »

Expected the slight increase in premium, but got the admin fees removed.

To do this, I used The Data Protection Act. If a company holds incorrect information on you, they are obliged to amend it. Schedule 1(1)(4) of the DPA lists the requirement for personal data to be kept up to date. If they'd been notified and refused, I successfully argued they'd be in breach of the DPA.

Could be something to use. Or may have just agreed with me as a means of ending the call.

The individual agent on the phone may have agreed to get you off the line, or had got cold feet with the thought of doing something you were assuring them was illegal.

As a wider suggestion, its actually has legs as a method of challenging the fees outside, or in combination, with FOS. The Information Commissioner's Office (ICO) website has the following:

Q. Does personal data always have to be up to date?

A. This depends on what the information is used for. If the information is used for a purpose that relies on it remaining current, it should be kept up to date.

(comment) It would be very hard for an insurer to argue that they didn't need to keep your personal information up to date, such as your address, mileage, etc. as these are used to price the policy and contact you with documentation. This wouldn't apply for different prices as a result of the change. It also wouldn't apply to cancellation charges, assuming that these are stated in the T&Cs of the policy that you signed up to, as cancelling the policy doesn't involve amending your personal information.

My gut feeling is that companies may then find it tricky to justify admin charges at current levels as being proportionate to the cost involved in making the change.

Q. What happens when individuals challenge the accuracy of information held about them?

If this happens, you should consider whether the information is accurate and, if it is not, you should delete or correct it. Sometimes the individual may be able to provide convincing documentary evidence that, for example, a date of birth has been recorded incorrectly.

If an individual is not satisfied that you have taken appropriate action to keep their personal data accurate, they may apply to the court for an order that you rectify, block, erase or destroy the inaccurate information.

(comment) Intuitively, the ICO would take a dim view of companies charging the customer in order for them to process updates to personal information that a) the company requires the customer to keep up to date by informing them of any changes, b) is personal data as defined by the DPA and the customer therefore has a legal right to ask to be corrected.

If the company refuses to update the information because you won't pay the admin fee, then they put themselves in clear risk of a DPA breach by not taking sufficient steps to keep the information accurate.

If you were to ask a court to force them to update your address to the correct one after having asked them yourself, it would be a relatively easy to prove where you live and hard to see how the company could successfully argue with you that customers need to have a charge levied on them in order for the company to meet its legal obligations under the DPA.

dunstonh wrote: »

It is a shame that the article doest give even a small mention to why these explicit charges have cropped up more over recent years than in the past.

Whilst I see your point, there are other ways for insurers to flag and deal with problems as opposed to applying blanket levies on all customers updating information that the insurer is legally obliged to keep accurate when the customer informs them of a change, and can evidence it if required.

thelawnet

I don't see a problem tbh.

People change their policy, they get charged for that, the amount charged might be higher than the cost of the service but at the same time it all gets priced in and overall the total cost to the population at a whole is the same.

If it was £30/month, or £30/day as with bank fees, I might be concerned, but I really can't get upset about a one-off £30 fee. As for £65 to cancel a policy, how much would you get charged to cancel a gym membership, your BT phone bill, your mobile phone contract, etc? In many cases far more than that, it can run into hundreds.

thelawnet

BTW, it would be helpful to point out that you have a statutory cooling off period where you can cancel for little or nothing.

TSx

thelawnet wrote: »

BTW, it would be helpful to point out that you have a statutory cooling off period where you can cancel for little or nothing.

Not always, many insurers charge a cancellation fee which can be quite pricey even if you cancel it before the policy starts.

JimmyTheWig

Also worth noting that the Admiral group always tend to be significantly cheaper for car insurance (for me, at least).

Changed cars at the weekend. 6 months left on the policy. Been with them for a few years (they've matched my best quote [with their sister companies] at renewal).
Cost about the same to cancel the existing policy and take out a new one than to change the existing policy. Obviously with the first option I get 12 months insurance, with the second I get 6.
Customer services agreed to waive the cancellation fee, but it still would have been better value to pay it and take the new policy.

acrleyton

Some insurers charge a fee, some don't. It's just like Ryanair charging for baggage and BA not.

If the insurer hasn't been upfront about any fees at policy inception then I'd say there's an issue. But if they have, then factor in the cost of maybe one or two changes when you're comparing prices.

Are the charges disproportionate? Maybe. But I don't think it's fair to say insurers are "ripping us off" just because some hide the admin charges in their actual premiums.

Lifes_Grand_Plan

The worst thing about these fees is not how much they charge (although that is bad)... but the fact that they are dishonest about them, i.e. they hide them.

I.e. if you ring up and say you have a new car and you want to change the insurance policy, they say "ok, we can do that. It will cost you £100" (for example...

What they are hiding though is that the difference in changing from car A to car B is only £60 and the other £40 is their admin fee.... They don't tell you that though and people just assume that the full £100 was because the car is more expensive to insure.

Hooloovoo

Lifes_Grand_Plan wrote: »

What they are hiding though is that the difference in changing from car A to car B is only £60 and the other £40 is their admin fee.... They don't tell you that though and people just assume that the full £100 was because the car is more expensive to insure.

That would depend on the insurer.

I changed my car the other day and when I phoned up IAM Surety (run by Adelaide Insurance) they spelt out the charges - a 5% policy uplift due to it being a newer car (£15) and £10 admin fee making £25 total.