Admin Charges by Car Insurers

brazilianwax

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.

There are other staff costs too. The analysts that work out what impact your circumstances should have on your premium. The computer programmers that convert those rating factors into the quote systems. The tech staff that make sure the computers are working properly, so that the person at the other end of the phone can change your details. The postboy/girl who takes your letter and ensures it is posted.

Plus of course you've forgotten business rates and corporation tax that has to be paid out.


I agree with razzkaz that those who burden the system more should pay more.

lisyloo

On what legal grounds?

My understanding is that insurers can charge a fee that relects the work involved but cannot charge punitive fees.
Therefore if certain people feel that these fees do not reflect the work involved the I don't understand why they aren't disputing it.
Once a test case is taken to court then the whole nation would be able to get this sorted (in the same way as bank charges).
I have never gotten a satisfactory answer to the question as to why people aren't taking ti to court if they think it's illegal.

BTW - I personally think some of the fees DO reflect the work involved but it obviously depends on the amount.
For example I know that it costs an employer approximately double an employees wages to emply them when you take into account all the costs e.g. employers NI contributions, so I think some people are underestimating.

itsbeef

Over £60 in "Administration costs " for the AA to cancel my policy!!!

:mad: :mad: :mad: :eek: :eek: :eek:

lisyloo

Over £60 in "Administration costs " for the AA to cancel my policy!!!

Just wondering, why did you not buy a policy to suit your needs in the first place.

If more people did this then there would be less work and less admin fees.
Of course some people have an unexpected change of circumstances foisted on them, but this can't apply to everyone.

How much of this is down to bad planning?

littlepockets

Prudential tried to charge £16 for change of address

So I complained on the grounds that
1. The increased premium I paid as a result of changing address already reflects a profit element that covers their admin costs
2. The Policy document actually states that a charge "may" be applied which seem to leave at the whim of Prudential
3. Threatened to complain to the Ombudsman

Got my money back after a 5 minute discussion

Strange that my home and building insurance didn't charge an admin fee but the motor did

olly300

lisyloo wrote: »

My understanding is that insurers can charge a fee that relects the work involved but cannot charge punitive fees.
Therefore if certain people feel that these fees do not reflect the work involved the I don't understand why they aren't disputing it.
Once a test case is taken to court then the whole nation would be able to get this sorted (in the same way as bank charges).
I have never gotten a satisfactory answer to the question as to why people aren't taking ti to court if they think it's illegal.

Cases have been taken to the financial ombudsman.
http://www.financial-ombudsman.org.uk/publications/ombudsman-news/54/insurance.htm

So if someone is really unhappy they need to follow that company's complaints procedure before taking them to the ombudsman (which is free for the consumer) or to small claims court.

lisyloo wrote: »

BTW - I personally think some of the fees DO reflect the work involved but it obviously depends on the amount.
For example I know that it costs an employer approximately double an employees wages to emply them when you take into account all the costs e.g. employers NI contributions, so I think some people are underestimating.

I do as well.

In addition apart from people in very unfortunate circumstances where they have to change or cancel a lot of people are cancelling a policy mid-way through because they can get a cheaper policy elsewhere.

With amendment fees you are really likely to know that you will be moving house or changing car a good few months in advance so unless you are impulsive in all financial matters it pays read the small print and ask yourself will my situation change before the end of the policy.

BTW I've had to pay amendment fees this year but knew I would have to, and paying the amendment fees was cheaper than paying for the extra insurance costs at the beginning of the policy.

raskazz

lisyloo wrote: »

My understanding is that insurers can charge a fee that relects the work involved but cannot charge punitive fees.
Therefore if certain people feel that these fees do not reflect the work involved the I don't understand why they aren't disputing it.
Once a test case is taken to court then the whole nation would be able to get this sorted (in the same way as bank charges).
I have never gotten a satisfactory answer to the question as to why people aren't taking ti to court if they think it's illegal.

BTW - I personally think some of the fees DO reflect the work involved but it obviously depends on the amount.
For example I know that it costs an employer approximately double an employees wages to emply them when you take into account all the costs e.g. employers NI contributions, so I think some people are underestimating.

The issue of admin fees is a very different one to the issue of bank charges. The entire basis of the legal challenge to bank charges is that consumers should not be disproportionately punished for breach of contract. Insurance administration fees are fees for providing a service, not penalty fees for breach of contract.

As someone who has studied the effects of the Unfair Terms in Consumer Contracts Regulations, my understanding is that insurer administration fees that are clearly stated in the policy wording are not deemed unfair.

Certain companies do charge ridiculous fees - see my original post in this thread - however this does not make those fees illegal. It's my personal opinion that as long as any fees that may be incurred are stated in the policy documentation, then the consumer should cough up.

nelbo009

I work for Endsleigh Insurance, and our admin fees vary depending on product:

Motor
Adjustment fee - £15
Cancellation fee - £50

Home
Adjustment fee - £2.62
Cancellation fee - £6

Travel
Adjustment fee - £0
Cancellation fee - £20

Student Possessions / Landlords
Adjustment fee - £3.50
Cancellation fee - £3

Each of these are stated in the policy documentation, and are also disclosed at time of purchase as per FSA requirements.

itsbeef

lisyloo wrote: »

Just wondering, why did you not buy a policy to suit your needs in the first place.

If more people did this then there would be less work and less admin fees.
Of course some people have an unexpected change of circumstances foisted on them, but this can't apply to everyone.

How much of this is down to bad planning?
[/b]

Well I dont see that it costs £60 to type in an address and pres cancel? A friend who worked for Norwich Union has told me that their system was that simple to cancel a policy, so maybe 2 minutes to cancel a policy earns £60?

Its a rip off....

Its the same principle as the recent Bank Charges fiasco.....

dunstonh

Well I dont see that it costs £60 to type in an address and pres cancel? A friend who worked for Norwich Union has told me that their system was that simple to cancel a policy, so maybe 2 minutes to cancel a policy earns £60?

And how many millions have NU recently announced they are going to spend on replacing a number of their computer systems to allow it to be as easy as pressing a button?

You can spot the individuals in the thread that would never make it in the self employed world. The assumption that charge = profit is would see your business fail very quickly.

Its the same principle as the recent Bank Charges fiasco.....

There isnt a single similarity.

In real terms, car insurance is almost at its lowest premiums. Many of the premiums have come down as the admin costs have gone up. The move into a more explicitly charged way of doing things is what the Govt want and apparently consumers too. Yet when we see examples of explicit charging, like this, all we seem to get is complaints.

Perhaps we should go back to implicit charging, increase car insurance premiums and hide the admin charges inside the premium.