Admin costs for cancelled insurance

dauphin

lisyloo wrote: »

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



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).

No, I have not won a case (or had to start a case) but the Financial Ombudsman link I provided at least makes it clear that a test of reasonableness does apply. Given that charges of less than this are generally considered excessive in other areas such as credit card charges (which I know relates to penalties, but there is a similar requirement of reasonableness) I would be surprised to see a cancellation charge of £45 upheld by a County court judge.

dunstonh

People also seem to be forgetting that there has been no breakdown given for that £45 charge.

The car insurance was paid monthly so there was a credit agreement involved. So, early cancellation has to cover the costs of the insurance company and the credit company as well as calculating the pro rata payment (which could be part of that £45).

The FSA do state fees have to be reasonable. However, they do not state what reasonable is. I would think that they would consider £45 reasonable to cancel both an insurance policy and a credit agreement.

lisyloo

Given that charges of less than this are generally considered excessive in other areas such as credit card charges (which I know relates to penalties, but there is a similar requirement of reasonableness) I would be surprised to see a cancellation charge of £45 upheld by a County court judge.

As dunstonh points out you have to make sure you are comparing like with like here.

Just out of interest, if you think the case is so strong, why do you think no-one has taken it through the ombudsman or county court yet?

movilogo

The whole idea of high cancellation cost is to dissuade the consumer from cancelling the policy!

All they do is updating one/two fields in the database when you cancel. Then they send you a letter in standard post that you have cancelled.

It is no way near £45.

Some insurer [eg. Admiral takes £19] charges money even if you cancel during cooling off period.

Both Admin and Penalty charges are same. The only difference is that they are "legally" different terms for sucking money from consumers.

At the end, as usual, the law sucks.

lisyloo

All they do is updating one/two fields in the database when you cancel.

Well that needs a call center to answer your call and an admin team to collect and open the post and someone employed to make the decision and press the button.
Of course that would all need to be reocrded, backed up, stored and disposed of properly.
Someone would then need to be employed to print off the letter and put it in an envelope (or an automated system needs to be paid for and maintained).

All those people need to be have employers national insurance, pensions, holiday, sick pay, maternity and compassionate leave etc.

It is no way near £45.

Why not take a test case to court then?

We hear a lot of claims on here about how it's unfair but so far no-one prepared to test it out in court.
I have to wonder why that is if you are all so sure of yourselves........................???

iceicebaby

movilogo wrote: »

All they do is updating one/two fields in the database when you cancel. At .

It is not as easy as just updating 1 or 2 feilds in a database. As car insurance is covered by so many rules and regs, there are all the legal aspects to take into account as well such as the updating of the national insurers database to say you no longer have that insurance, data protection, financial service regulations etc etc. And of course you require a copy of your no claims sent out after a policy has been cancelled thats subject to rules and regs, never mind the postage and paper costs and the person/machine to put it in envelope.

If all I ever had to do when I was cancelling people's insurance was to update 1 or 2 feilds in a database my job would have been a damn site easier!

ArchieB_2

The above arguments that cancelling insurance isn't easy and may be able to support a £45 cancellation fee (majority are fixed if going direct and have no relation to the payment method btw) are disproved by the fact that when I don't renew, I don't get charged a penny for what is exactly the same thing!

Nobody would argue against the fact that IT and call centre costs are substantial, but it is a huge leap to equate this to a £45, one off, transactional fee against what could be a £200 annual premium.

The only EXTRA cost to the insurer in cancelling a policy vs non renewal is an extra phonecall to deal with, a very simple transaction on an IT system and that is it. £45 still sound reasonable??

lisyloo

Do you work in IT archie?
I work in IT and I would charge you a 5 figure sum for the above change (obviously that would be split across many policies).
If you want support (24x7?) then that will cost 5 figures PER YEAR.

Yes it sounds reasonable to me on the basis of my experience of what these things cost.

If you don't renew you don't need to phone up or write in (hence no-one to process that) plus you don't need a refund to be processed.

I don't want to keep going round the same old arguments.

I would like to see one of you taking actions to back up your words.
So tell me why isn't one of you taking the company to the ombudsman or to a county claims court??

This is the 3rd time of asking with no explanation.
If it was as clear as day to me that I was being ripped off then I'd be taking action straight away.
The fact that no-one has or is (or can offer an explanation as to why not) leads me to the obvious conclusion that you aren't really all as 100% sure as you claim to be on a board like this where there are no consequences to you being wrong.

If you think that the people that work in the insurance and IT industries are wrong, then go ahead, make my day.....
Take a case and win !!

There you go, gaunlet firmly thrown down (for the 3rd time)...yawn......

ArchieB_2

£99,999 divided by 1M policy holders equals £9.99.

Add in your service cost and that is nearly £20 in total. So according to your calculations the cost would be half (by the way, your figures don't stack up anyway).

I don't work in IT, but I do work in insurance, I know what the costs of operating call centres and generally administering policies is. £45 categorically does NOT reflect the cost of cancelling the policy. What it does do is compensate the insurer for the loss of that customer and the pottential loss of premium income, for the cost of acquiring the new customer in the first place and so on. If the cost to the company was £45 then they would have the worlds worst IT platform and would never be competitive in the market.

If you are involved in setting up and maintaining call centre or insurer IT systems you would know that the £45 cannot be the transactional cost!

I am not calling for the charges to be banned, or saying they are illegal, BUT £45 is not the cost to the insurer!

lisyloo

£99,999 divided by 1M policy holders equals £9.99.

That is ONLY ONE of the costs.
We have listed many of these in previous posts so I am not going to continually repeat them.

or saying they are illegal, BUT £45 is not the cost to the insurer!

By implication you are.
If that isn't the direct cost to the insurer then it's illegal right?

I think it's getting boring for everyone going round the same old arguments.

If anyone thinks it's illegal then the obvious thing to do is to challenge it. Still waiting for an explanation as to why no-one is doing that..........

I would like to see one of you prove it in court (no really I would).

I currently have no need to cancel my insurance, but if I do then I will have a go at challenging it and let you know how I get on.