Admin costs for cancelled insurance

deanos

how come most people think bank charges are not fair but a £45 charge to cancell a policy seems ok to most posters on this thread

lisyloo

how come most people think bank charges are not fair but a £45 charge to cancell a policy seems ok to most posters on this thread

Hi deanos,

The main difference is that penalty charges are illegal in some cases and can be claimed back.
Fees for admin are entirely legal.

The question is then are they fair.
For example mortgage companies charging £300 to put deeds in the post.

I would definitely say that £300 in unfair but when it's £30 or £40 then it becomes much harder to argue because you don't necessarily know what all the costs incurred are.
Personally I think the costs are higher than people imagine.
It's not just pressing a button.
There are regulations, data protection and privacy issues to deal with which all cost money to implement as well as the cost of providing staff to deal with correspondance.
As I have already said I think a lay person will have a hard time arguing about a companies costs unless they have a lot of inside info.

dunstonh

Personally I think the costs are higher than people imagine.

The costs are getting crazy. Most people dont realise the cost of regulation, let alone office related costs. Then you have pressures on bringing prices down. In real terms, car insurance is historically cheap at this time. As mentioned higher up, the gross premium has come down but costs for services has crept up. So, if you dont change address, change the car or cancel, then you wont pay the extra costs.

A_N_Otter_2

£45 for cancelling an insurance premium is ridiculous!

atticgirl2003

Is there a cooling off period when you take out car insurance.
How long would you get without any charge if you change your mind.
Say if you found someone cheaper.

C_Ronaldo

if i had to cancel my insurance and it would cost me £45 to cancel id pay up,

dauphin

I do not believe there is any way that charges on this scale can be justified as "administrative costs". I raised the question of the possible unenforceability of these charges, albeit in a slightly different context, in a thread on this board back in August last year and I remain of the view that they are highly questionable.
Please refer to this advice on the website of the Financial Ombudsman in support of my opinion.

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

I think it would be well worth challenging the insurance company to justify their cancellation charge, quoting the Unfair Terms in Consumer Contracts Regulations 1999.

I predict that this will be the next big money grab (following upon credit card charges and bank charges, although on a slightly different basis) to hit the public consciousness!

lisyloo

£45 for cancelling an insurance premium is ridiculous!

I disagree.
I think the call center costs are in six figures (split over many premiums obviously). IT systems with be 5 or 6 figures.
Personally details will have to be disposed of in an expensive manner not just dumped at the tip etc.

Is there a cooling off period when you take out car insurance.
How long would you get without any charge if you change your mind.
Say if you found someone cheaper.

Usually it's 14 days to give you sufficient time to read all the terms and condition.

I raised the question of the possible unenforceability of these charges

But have you won a case?
It seems that opinion is split on this so a test case would be needed.

I think it would be well worth challenging the insurance company to justify their cancellation charge

call center charges
adhering to regulatory policies
adhering to privacy policies
ensuring safe disposal of customers details
IT systems for recording details

If it was hundreds I would agree, but my opinion is that they could easily justify £45. Do the peopel that say otherwise fully understand the costs of the above? (I understand the costs of IT systems as I work in IT and you would be talking in the order of 5 figures for software).

Horasio

It is another rip off charge and should be tackled in the same way as banks charging.

I cancelled an insurance within the cooling off period and it cost me £20:mad:

lisyloo

It is another rip off charge and should be tackled in the same way as banks charging.

You have failed to understand a fairly major point which is:

Legally speaking under current UK law PENALTY charges are not the same as ADMIN charges.

Admin charges are completely legal.
The next point to argue is whether they are "fair".
Currently we disagree on this but I think a number of people are expressing opinions without a full understanding of the administration processes involved that insurers have to go through (some like the data protection act are enfored upon them by law).
I am not an expert in these processes but I am an expert in IT systems and I do understand the costs of those.

I cancelled an insurance within the cooling off period and it cost me £20

So you believe this service should be provided for free? at the expense of other policyholders?