Car insurance cancellation fees

sue_marie

I've just bought a new car and it came with a good insurance deal so I rang Sheilas' Wheels to cancel my existing policy. The process took just a couple of minutes and at the end the advisor informed me that there was a £55 cancellation fee. Outrageous. What do they need to do to cancel my policy that justifies that fee? We should campaign against such unfair practices from insurance companies!

dunstonh

The process took just a couple of minutes and at the end the advisor informed me that there was a £55 cancellation fee. Outrageous.

What exactly is outrageous?

I think a couple of minutes is not bad going.

What do they need to do to cancel my policy that justifies that fee?

Who is paying for the staff member you spoke to? The building they sit in etc.

We should campaign against such unfair practices from insurance companies!

It is not unfair. Indeed it is very fair and expect to see more of it. The FSA has a preference for explicit charging rather than cross subsidy. Surely it is more unfair for others to pay for your choice to cancel and incur costs

We should campaign for better eduction in schools so people learn to read and understand what they are buying. I bet you spent longer deciding which mobile phone you would buy than your insurances.

mikey72

sue_marie wrote: »

I've just bought a new car and it came with a good insurance deal so I rang Sheilas' Wheels to cancel my existing policy. The process took just a couple of minutes and at the end the advisor informed me that there was a £55 cancellation fee. Outrageous. What do they need to do to cancel my policy that justifies that fee? We should campaign against such unfair practices from insurance companies!

They are giving you a pro-rata refund of the premium aren't they?

sue_marie

I'm not objecting to paying charging. I'm objecting to paying unreasonable charges. £55 for a couple of minutes' work is not reasonable.
"Who is paying for the staff member you spoke to? The building they sit in etc."
They must be on superb salaries and working from luxurious offices.

dunstonh

I'm objecting to paying unreasonable charges. £55 for a couple of minutes' work is not reasonable.

What makes you think that £55 is unreasonable? What would you consider to be reasonable?

personally, I do think that is at the upper end and figures around £25-£30 are more in line with what you would expect.

"Who is paying for the staff member you spoke to? The building they sit in etc."
They must be on superb salaries and working from luxurious offices.

For every front line member staff there is around 5 behind the scenes. You also ignore the cost of resources that allow transactions to occur quickly. Not too long ago, Aviva reported that it spent 23 million a year on just its HR computer system. These things make transactions etc quicker and easier but the cost to put these things in place is high.

The admin charge also has to reflect that some people will be on the phone for 5 minutes whilst others could be on the phone for 50 minutes. A bit of cross subsidy is inevitable. So, they have to average out the cost of each phone call.

The alternative to explicit charging for admin tasks is to return to the days when premiums included the cost of admin whether you created an admin task or not. Then everyone was paying it every year whether they created any admin tasks or not.

Arg

We should campaign for better eduction in schools so people learn to read and understand what they are buying. I bet you spent longer deciding which mobile phone you would buy than your insurances.

It's got nothing with reading when we could just get rid of rip off practices instead.

dunstonh

Arg wrote: »

It's got nothing with reading when we could just get rid of rip off practices instead.

I agree where there is rip off practice. Admin fees are not rip off and most people are better off because of them. However, I do think some providers are greedier than others but if you choose to buy a product with higher charges then you shouldnt really complain about it. You had the choice to buy something else.