Swinton monthly instalments

mjjordan

My daughter's car policy through Swinton is on "only 11" instalments i.e. a deposit equivalent to 1 month and then 10 d/ds, so, by the end of month 10 it will be 100% paid for the 12 months. Fine. But.. they say in their copious reams of small print that they will leave the d/d running to "act as a deposit on your next year's policy", so if you let it auto run into next year, by month 21 you will have paid up for 24 months and then be 3 months in hand with them and so on. Who is getting the benefit of all these advance premiums they haven't yet had to pass on to the insurance companies I wonder? My advice to her has been to make sure the d/d is cancelled at the bank after the last payment they are entitled to for this year's policy and start another one if and when Swinton get next year's business, otherwise she has to ask for these advance payments back - I'd rather not give in the first place than have to ask for any company to repay an overpayment!

InsideInsurance

Assuming it is a 12 month policy, just because a DD is "running" doesnt mean they will collect every month, it just means they dont cancel the instruction at the end of the policy so that if you do renew (which will happen automatically unless you instruct them otherwise) then the payments can continue to be taken without having to set up new instructions

stugib

InsideInsurance wrote: »

Assuming it is a 12 month policy, just because a DD is "running" doesnt mean they will collect every month, it just means they dont cancel the instruction at the end of the policy so that if you do renew

Swinton have set up something they call a 'renewal deposit' that's detailed on their T&Cs page. Basically they take a deposit for the renewal a few weeks before the renewal date then refund it if you cancel the autorenewal. Wonder how much interest can be earned by 'number of policies' * deposit * 2 months interest!

Renewal deposits from direct debit customers
Up to eight weeks before your renewal date, a further payment of your then monthly amount will be taken as a returnable deposit against next year’s renewal. Please do not treat our taking of this payment as renewal of your policy, it is simply a pre-renewal advance payment. We will hold this money in a statutory trust account in accordance with FSA Client Money Rules until the earlier of a) your renewal premium becoming due or b) you confirming that you do not wish to renew. In the case of a) this amount will then be held by us as agent of the relevant insurer and then used against your renewal premium. In the case of b) this payment will then be refunded to you.

Any interest earned in respect of the monies held on your behalf in the statutory trust account will be retained by us. In the event that such interest exceeds £20, then we will seek your consent to this arrangement.

InsideInsurance

stugib wrote: »

Wonder how much interest can be earned by 'number of policies' * deposit * 2 months interest!

With a BOE base rate of 0.5% and with businesses having to pay fees on every transaction (one for taking the money and a second for refunding it) I doubt the extra few weeks will make much difference in terms of income.

In terms of increasing customer retention (for a number of possible reasons) then it probably is worth the additional banking fees