Cancelling insurance

Guest101

Haven't had a chance to check yet. Will be doing shortly.

There's 9 months to run, but 7 payments, with over a third paid ( first payment being higher ).

I'm pretty sure that MSE has said before that admin fees cannot just be set, these costs I believe must be justified.

Quentin

Guest101 wrote: »

I'm pretty sure that MSE has said before that admin fees cannot just be set, these costs I believe must be justified.

No. (Insurance isn't regulated by MSE)

Fixed admin/cancellation fees are the norm

InsideInsurance

Guest101 wrote: »

I'm pretty sure that MSE has said before that admin fees cannot just be set, these costs I believe must be justified.

They do have to be justified and I've worked with one client who was asked to justify their costs to the FSA, never to MSE though :beer: That justification can be done on a general basis and thus a fixed fee for each rather than a calculated cost per buyer.

Marketing costs for a single policy can easily exceed 100 quid for an insurer, if you've cancelled 25% of the way through you'd owe them 75% of that back. As its a broker you bought through there can be fees they have to pay the insurer for the cancellation so all of those are passed on. There are costs for quoting and setting up a policy so 75% of those passed on. The credit provider can add in charges for early termination of the loan. Operational overheads for both setting up and cancelling the policy.

Now one argument is that these are just running costs of a business and the insurer should "absorb them" just as many shops do for returning items or paying by card however absorbing them really just means reflecting those costs in the price that everyone pays.

Current thinking is it is better/ fairer that those who incur the costs pay the costs rather than making everyone else paying more.

Guest101

InsideInsurance wrote: »

They do have to be justified and I've worked with one client who was asked to justify their costs to the FSA, never to MSE though :beer: That justification can be done on a general basis and thus a fixed fee for each rather than a calculated cost per buyer.

Marketing costs for a single policy can easily exceed 100 quid for an insurer, if you've cancelled 25% of the way through you'd owe them 75% of that back. As its a broker you bought through there can be fees they have to pay the insurer for the cancellation so all of those are passed on. There are costs for quoting and setting up a policy so 75% of those passed on. The credit provider can add in charges for early termination of the loan. Operational overheads for both setting up and cancelling the policy.

Now one argument is that these are just running costs of a business and the insurer should "absorb them" just as many shops do for returning items or paying by card however absorbing them really just means reflecting those costs in the price that everyone pays.

Current thinking is it is better/ fairer that those who incur the costs pay the costs rather than making everyone else paying more.

Thanks really helpful

I do think that 'admin' costs are abit of a joke, especially when they are to cover salaries. These admins aren't paid by the cancellation presumebly, so that cost exists whether I cancel or not. Similarly the non single use items - ie the IT is there regardless.

So I can certainly see the running cost argument.

But none the less interesting.

Guest101

Oh and I meant advice on various things posted on MSE, obviously not that MSE is the authority.

Nodding_Donkey

Guest101 wrote: »

Thanks really helpful

I do think that 'admin' costs are abit of a joke, especially when they are to cover salaries. These admins aren't paid by the cancellation presumebly, so that cost exists whether I cancel or not. Similarly the non single use items - ie the IT is there regardless.

So I can certainly see the running cost argument.

But none the less interesting.

So you think that people that don't cancel early should pay the admin costs of the ones that do?

How the hell can that be right?

George_Michael

Guest101 wrote: »

No I understand that. I've purchased insurance for 12 months, for a total of £600 (roughly) but taken a credit agreement to pay for it, which charges interest. The interest is less than £100 for the year, so pro rata'd less than £10 per month.

So the £100 seems excessive, given that the 'cost' to them seems to disappear. And even if the credit provider wants their full interest payment, which presumebly a portion of they've had already, that doesn't equal £100 at any point.

There is another cost that you are forgetting about.

There will also be a cost involved in setting up the policy in the first place and this cost will also be part of your monthly payments and like the credit charge, the remaining balance of this cost will also have to be paid off if you cancel the policy early.

Once you combine the outstanding credit fees, the outstanding setup fees and the admin fee for cancelling the policy, it probably would be close to the £102 you have been quoted.

Guest101

Nodding_Donkey wrote: »

So you think that people that don't cancel early should pay the admin costs of the ones that do?

How the hell can that be right?

No, im saying that the company should bare these costs as these cost happen if someone cancels or not.

if in a 12 month period, no one cancels, these people still get paid!

laidbackgjr

But on a 12 month policy they get the cost back as it's built into the premium, say it costs £60 to set up a policy, thats £5 a month. But if you cancel after 3 months, you've only paid £15, so they need to add the extra £45 as part of the cancellation costs.

AdrianC

To put the "cost of setting up a policy" into perspective... Both of our current insurance policies, and the one we'll be setting up as soon as the new vehicle's on the road, have annual premiums of under £100. And one of those policies was found/bought through the Meerkats.