Admiral Car Insurance - Unfair Admin Fee

dacouch

Insurance is a different product to those you quote as it relies on the truth being told Utmost Good Faith and all that.

If all their customers told the truth / did not make mistakes, they could price their premiums lower than they currently do.

The current situation means the customers who have declared the correct information are subsidising the premiums of people who have not declared the correct information.

Some companies appear to have started to make more checks on their customers to check the information is correct and in your case charging a fee when they discover a mistake. All or most of the staff involved in the checking of declared information would be solely employed for that reason.

InsideInsurance

weejangus wrote: »

To be honest, I'd expect any company to pay their staff salaries from the sales of their product / services. That’s what the vast majority of companies do. Why would an insurance company be any different? If I call my bank and ask them to change my address, overdraft limit, order a new card, etc, they don't charge me a fee to cover the staffs wages. On the flip side, I may go years without making any changes with my bank but you can bet your bottom dollar they will still use some of the profit made from my custom to cover their staffs salaries.

Both models are common, explicit charging or implicit. Same goes for P&P for example when you look at mail order/ internet shopping.

As insurance is a distress purchase and the market is so price sensitive such that people will switch insurers to save less than £1 it is inevitable that it has resulted in the explicit method becoming far more common. The fact the regulators have previously stated they much rather the model that only those that use a service have to pay for it clearly also helps.

Personally, given the choice I would much rather that my bank did actually give me 5% interest on my account but charged me an admin fee if I call to change my address or ask for a new card etc.

weejangus

dunstonh wrote: »

So, you would rather everyone's annual premiums are higher every year then?

That's not what I said, don't try and put words in my mouth. Having worked for more than one insurance company over the years at a senior management level, it is my experiance that Admin fees are not a true reflection of the cost incurred by the company. And unless Admiral are paying their staff way above average wages, they are no different.

dunstonh wrote: »

No it is not. Most insurers are on the explicit charged model now and have been for some time.

Again, putting words in my mouth. Come on, stop doing that. I stated "vast majority of companies", not specifically insurance companies. I compared Insurance Admin fees to a Financial institute (a bank) to show that other companies do not charge for small changes however they do still incur the cost of staff, training, IT, etc. When I state "vast majority of companies", I was referring to other companies providing a service - I.E. Banks, Building Societys, TV / Broadband providers, etc. These companies don't charge admin fees.

dunstonh wrote: »

Insurance is a different product to those you quote as it relies on the truth being told Utmost Good Faith and all that.

Banks also rely on the truth being told and having accurate information. KYC rules are in place to ensure customer details are accurate and true. That being said, if a customer makes a mistake when applying for services, the bank do not charge them a fee to correct that mistake (despite having teams of underwriters in place to check discrepancies).

InsideInsurance, thank you for your well written and factual reply. I fully respect your opinion and I cannot fault your reasoning. I guess we just have different views and different expectations. Personally, I would rather pay an extra few £'s per year and know that I'll never be hit with an admin fee if I ever decide to move house or change my car etc (or make a little mistake!). But I fully get that you are happier knowing that you're not paying for a service that you may never use.

I think this thread has run on long enough. Can we all agree to disagree now and move on?

InsideInsurance

weejangus wrote: »

Having worked for more than one insurance company over the years at a senior management level, it is my experiance that Admin fees are not a true reflection of the cost incurred by the company. And unless Admiral are paying their staff way above average wages, they are no different.

And this is presumably what you told the ombudsman/regulators when asked to defend your employers fees as a senior manager?

As a non-senior manager who's worked in insurance for too long I've never actually seen the calculation for Admin fees but have worked on the same for Cancellation Fees in response to a regulator query.

Insurers/ brokers have been required to justify their expenses in the past and so I would assume that your colleagues didnt agree with your thinking and were able to illustrate that the costs were proportional to the costs incurred. Of course you arent just talking about 1 persons salary for 5 minutes but the whole infrastructure that goes around them from team leaders, trainers and compliance/audit to computers, buildings and software. Divide all that cost by the number of MTAs you do a year and I suspect the number that comes out will be higher than their fee.

weejangus

InsideInsurance wrote: »

And this is presumably what you told the ombudsman/regulators when asked to defend your employers fees as a senior manager?

As a non-senior manager who's worked in insurance for too long I've never actually seen the calculation for Admin fees but have worked on the same for Cancellation Fees in response to a regulator query.

Insurers/ brokers have been required to justify their expenses in the past and so I would assume that your colleagues didnt agree with your thinking and were able to illustrate that the costs were proportional to the costs incurred. Of course you arent just talking about 1 persons salary for 5 minutes but the whole infrastructure that goes around them from team leaders, trainers and compliance/audit to computers, buildings and software. Divide all that cost by the number of MTAs you do a year and I suspect the number that comes out will be higher than their fee.

As a senior manager, my role didn't require me to tell the ombudsman / regulator a thing. We have compliance departments to do that.

As a non-senior manager who has admitted having never actually seen the calculation for admin fees, how do you know what is involved in calculating the fee? Do you know what costs can and cannot be taken into account when making these calculations? You mention Team Leaders, Trainers, computers, Software etc. But do you think the Regulators would allow these to be taken into account IF these expenses would have been incurred by the business regardless? One could argue that, by paying my insurance premium in the first place, I have already contributed to the cost of the Team Leaders, Trainers, Computers and software therefore when making a change to my policy, all I should be asked to cover is the advisors time to make that change.

At the end of the day, you and I are never going to agree on this topic. We've both worked in the business and have a certain degree of inside knowledge - but even with this knowledge, we are allowed to have differing opinions.

As mentioned before, this threads gone further than it needed to. The issue was resolved and the outcome was a positive one (for money savers anyway). I think we've both made our cases pretty clear so I think we can leave it at that.