Admin Charges by Car Insurers

raskazz

OK, a few points to raise on these responses.

easynotec3 wrote: »

That's because that is not an admin fee (Insurance Premium Tax not applicable on admin charges)

This would have been an additional premium due to a change in the risk

It is an administration fee (technically an adjustment fee) that is payable in addition to any change in the risk premium. IPT is payable on administration fees (http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageExcise_InfoGuides&id=HMCE_CL_000194&propertyType=document#P27_1679 - Section 3.1) however the admin fee quoted is usually inclusive of IPT.

ranger1066 wrote: »

Hastings direct do charge £42 admin fee, but its does state in the policy booklet.

I'm certain it does not though I may be mistaken. Where does it state it, out of interest?

dunstonh wrote: »

You dont pay IPT on admin charges so in raskazz's case just under £12 of that £42 is increased premium due to increased risk. £2 is IPT. The rest is admin charge which will be around £28

See above regarding IPT - I'm quite shocked that you aren't aware of this as an IFA. I have no idea where you have got £12 "due to increased risk" from - the £42 is on top of any risk premium.

How do I know this?

I used to work for them. I left because the pay is terrible, the management are incompetent and the whole company is cheap and nasty.

dunstonh

See above regarding IPT - I'm quite shocked that you aren't aware of this as an IFA.

Provider admin charges are liable for IPT but not charges at IFA level.

The companies I use have no admin charges when amendments are done through us. If we were to charge, they would not be liable to IPT. THis is confirmed on that link you gave at 3.2.6. Although some could be subject to VAT.

So, I apologise, you are correct at the provider level but not at IFA level.

bizarre_82

As far as i was aware, insurers were not allowed to apply IPT to admin fees...?

Xenos

Churchill have just charged me £21 for merely changing my address, on top of an additional premium as well. No complaints on the premium, I appreciate that a different postcode might be a higher risk area, but £21 to type an address into a computer? Ridiculous. There's no way it costs them anything like that. I'd happily pay £5 for postage and printing costs, but £21 is plain and simply a rip-off.

Xenos

Further to my previous post... I decided to phone Churchill and make a bit of a fuss. I asked to speak to a supervisor and then strongly hinted that I would cancel my policy if they didn't do something. He said he couldn't do anything about the admin fee but that someone in the renewals department might be able to adjust my overall insurance fee to reduce the cost. He gave me a freephone number to call. I phoned it and they gave me a discount of £10.50 on the cost of my policy. It doesn't wipe out the admin fee, but it does reduce the sting a bit.

So, as usuall, if you're unhappy go higher up! It's amazing how a bit of persistance will get you refunds. This year I've also received two lots of £10 (one from a bank and one from a credit card company) just by making a complaint and asking to compensated for the inconvenience I'd suffered.

dunstonh

but £21 to type an address into a computer? Ridiculous. There's no way it costs them anything like that. I'd happily pay £5 for postage and printing costs, but £21 is plain and simply a rip-off.

Staff member of £15k a year. pensions and benefits, Office buildings and related costs, computer equipment, technicians, supervisors, managers, storage, energy costs, rates, time and profit.

Xenos

Oh for goodness sake, it still doesn't add up.

I'll be generous and allow them £3 for postage and printing (I don't believe it can possibly cost more than that).

I very much doubt they pay their call centre operators more than £8 an hour (gross, and I bet it's actually less than that for most of them, but I suppose supervisors might make a bit more thus creating a higher average). The call takes 10 mins at the outside, so that's about £1.33.

So it costs them about £4.33, maximum, to change my address.

They charge £21, so there's £16.67 PER CUSTOMER we haven't accounted for.

Of course they have to pay overheads such as lighting, heating, PCs, rent of their building etc but most, if not all, of that was (I assume) covered by my premium and the premiums of thousands of other customers. Even if we did allow for it, what would 10 minutes worth of overheads be? (And that's assuming they only take one call at a time, when of course they actually have several operators taking several calls at once.) Hard to estimate, but if it's anywhere NEAR £16.67 then, quite frankly, they need to take a long, hard look at their setup, because they flushing money down the toilet.

At the end of the day, they're making something like £10-£15 pure profit on this 'admin' charge. It's nothing more than a way of offsetting their low premiums.

lisyloo

If you feel very unhappy about it Xenos then why don't you take a test case to the small claims court.
I realise in your case it's only £10 but you'd be helping a lot of people out by doing a "test case".

I have never really got a satisfactory answer to the question of why no-one is prepared to take this to court.

raskazz

Xenos wrote: »

Oh for goodness sake, it still doesn't add up.

I'll be generous and allow them £3 for postage and printing (I don't believe it can possibly cost more than that).

I very much doubt they pay their call centre operators more than £8 an hour (gross, and I bet it's actually less than that for most of them, but I suppose supervisors might make a bit more thus creating a higher average). The call takes 10 mins at the outside, so that's about £1.33.

So it costs them about £4.33, maximum, to change my address.

They charge £21, so there's £16.67 PER CUSTOMER we haven't accounted for.

Of course they have to pay overheads such as lighting, heating, PCs, rent of their building etc but most, if not all, of that was (I assume) covered by my premium and the premiums of thousands of other customers. Even if we did allow for it, what would 10 minutes worth of overheads be? (And that's assuming they only take one call at a time, when of course they actually have several operators taking several calls at once.) Hard to estimate, but if it's anywhere NEAR £16.67 then, quite frankly, they need to take a long, hard look at their setup, because they flushing money down the toilet.

At the end of the day, they're making something like £10-£15 pure profit on this 'admin' charge. It's nothing more than a way of offsetting their low premiums.

You may 'assume' that they are covered by your premium but I am afraid they are not.

Ask yourself - why are their premiums low? Because people - like yourself - shop around for the lowest premium. If they incorporated these costs into premiums they wouldn't sell any policies. And it's absolutely fair to charge people according to how demanding they are of the insurer's resources, IMO.

raskazz

lisyloo wrote: »

If you feel very unhappy about it Xenos then why don't you take a test case to the small claims court.
I realise in your case it's only £10 but you'd be helping a lot of people out by doing a "test case".

I have never really got a satisfactory answer to the question of why no-one is prepared to take this to court.

On what legal grounds?