MSE News: Revealed: Millions face paying insurance firms admin fees of up to £50

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Millions of loyal customers face extra fees of up to £50/year simply for sticking with their existing insurance company...
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'Revealed: Millions face paying insurance firms admin fees of up to £50 to renew'
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  • Pincher
    Pincher Posts: 6,552 Forumite
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    I like to use a credit card I intend to cancel before the year is up.
    I think the Tesco credit card is the next to go.

    The exception is when they say yes to Amex, without surcharge, since I get 1.25% cashback, and it helps toward the £10,000 spend per year to qualify for the 2.5% cashback.

    Poor Churchill, they never had a chance of auto-(scr)ewing me. :D
  • takman
    takman Posts: 3,876 Forumite
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    I think this news story is pretty irrelevant!. It doesn't matter what fees that each insurance company charge. All you do is look at the total renewal price and compare it with other companies and choose to either renew or switch to another insurance company. It doesn't bother me if they charge a £20 "head off toilet roll supply fee" or a £10 "CEO car washing fee" if the total price is right compaed to other companies I'm happy to pay it!.

    Also I would like more clarification on this quote:
    Guy Anker, managing editor of MSE, says: “Auto-renewal is often a rip-off, and this investigation shows those who do it often face a double whammy, with extra renewal fees making it even worse.

    "This once again proves what we’ve long said – you should simply never auto-renew, but look around to find the best overall deal instead.”

    How exactly can auto renew be a "rip off"? Yes they may charge you a premium for this, but they clearly inform them of the price many weeks before and give them a chance to shop around. If the person still does not shop around and just let's it auto renew then it can't be called a "rip off" when they are choosing to let it happen!.
  • Ectophile
    Ectophile Posts: 7,377 Forumite
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    Some insurance companies say they charge an admin fee. But it's obvious that all the others must be adding their administrative costs somewhere - they don't do the work for free. They must just be quietly adding it to the quote.

    In any case, the only thing that matters is the total price. How they choose to dress it up makes no difference.
    If it sticks, force it.
    If it breaks, well it wasn't working right anyway.
  • agarnett
    agarnett Posts: 1,301 Forumite
    edited 12 July 2016 at 11:48PM
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    takman wrote: »
    I think this news story is pretty irrelevant!. It doesn't matter what fees that each insurance company charge. All you do is look at the total renewal price and compare it with other companies and choose to either renew or switch to another insurance company. It doesn't bother me if they charge a £20 "head off toilet roll supply fee" or a £10 "CEO car washing fee" if the total price is right compaed to other companies I'm happy to pay it!
    You don't sound very socially responsible. We get that you think you're ok, Tak, and that are you bovvered (no you're not) but that doesn't help create a fair country, does it?

    Fact is the chancing of fees for anything and everything where they haven't traditionally been charged previously or separately is now a rife business practice in many edgy arenas. The one we're looking at is another poorly regulated example that should have been smacked down the moment it started appearing.

    One more is the chancing of admin fees for everything imagineable by dodgy freehold owning management companies who think they can wind 4.5M UK flats leaseholders round their little finger with hugely crooked buildings insurance overcharges and fees for everything that crosses their desk. I could name one of the worst ... suffice to say their offices are in Southend. Nothing good financial services wise ever came out of Essex. Sadly it's where half the bloody City workers live now.

    Statutory Insurance products should in no way be seen as an opportunity to deceive, or as fair game for such crooked practice. Licences to conduct motor business should be threatened to be withdrawn by a government sufficiently on the ball to realise what is going on out here on the street.

    Suggesting it is ok is just naive and I suggest makes readers wonder what you actually stand for.

    I see the concept of a renewal fee as not only an overt attempt at introducing an extra charge which has nothing to do with sound motor insurance underwriting from one year to the next, but also as a cynical attempt at stealthily introducing a greatly increased short period charge for cancelling a policy at some stage after the renewal date. But of course it isn't called a short-period cancellation charge!

    In particular, it applies in the case where auto-renewal may have taken place but the renewal really wasn't intended. Budget's intention now seems to be that that situation can be prosecuted particularly heavily by the introduction of a "renewal" fee. The market players have so successfully created a market with so little customer loyalty, that the players themselves don't really care if they've created a portfolio of p^ssed off customers on their books, as long as they've extracted a stonking profit as the customer went through their books this time.

    Companies like Budget probably think they can always get a proportion of p^ssed off customers back again via another channel e.g. as bank introduced business. Not many realise that Budget is behind much of the motor insurance quoted by the main high street banks where it isn't always very clear BISL are involved if the main paperwork carries the name of the bank most prominently (not the insurer panel operator)!).

    What's an "insurer panel operator"? I don't know exactly because I haven't checked lately - a licence to print money perhaps? I just made it up on the hoof, because it sounds about right and last time I did check, Budget, for example, were not an insurer. They are middlemen. Like a number of the other names suggested as competitors in the MSE article, Budget are in fact a glorified insurance broker who make all their money by exploiting throughput of insurance business and placing it under delegated underwriting authority with a panel of insurers who thereby don't sully themselves with dealing direct with the customer. It isn't the insurers themselves that dream up these spuriously named charges that sound kosher except when they are the type of insurer that owns the broker as well!

    The article suggests that there are 20 main outfits in the market worth approaching of which 9 apparently now charge a renewal fee - anti-competitive crooks the lot of them! I've insured a car for 40 years and never paid one, so where's this suddenly sprung from that so many should think they can get away with it?
  • minislim
    minislim Posts: 357 Forumite
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    just ban auto renewals! it was only a fad made up by insurance firms when continuous insurance was introduced to try and make you think they're helping you out if you forget.
  • takman
    takman Posts: 3,876 Forumite
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    agarnett wrote: »
    Fact is the chancing of fees for anything and everything where they haven't traditionally been charged previously or separately is now a rife business practice in many edgy arenas. The one we're looking at is another poorly regulated example that should have been smacked down the moment it started appearing.

    I think your completely missing the point of what I was saying!. The insurance companies choose the prices they want to charge at renewal. So it doesn't matter what fees they charge or what they call them. All that matters is the total insurance price including all fees and tax.

    You then simply look at the total price and compare it with other insurers at renewal.

    If they add a £50 renewal fee or simply increase the insurance premium by £50 it makes no difference!. It is still £50 more!.

    Plus your very naive to think you have never paid a "renewal fee". If you have ever renewed car insurance with the same company they will have had a cost of the administration of updating the MID and sending out policy documents. This cost will have been included In your premium. So just because they haven't broken down the cost of your insurance to show the cost of administration, you have still paid it!
  • System
    System Posts: 178,102 Community Admin
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    Just call up when you get your renewal notice with the best quote you get and ask them to match/beat it.

    I do this with my car insurance and they've always matched/bettered it - but always call before your autorenewal cancellation period is up.
  • agarnett
    agarnett Posts: 1,301 Forumite
    edited 13 July 2016 at 6:19PM
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    takman wrote: »
    I think your completely missing the point of what I was saying!. The insurance companies choose the prices they want to charge at renewal. So it doesn't matter what fees they charge or what they call them. All that matters is the total insurance price including all fees and tax.

    You then simply look at the total price and compare it with other insurers at renewal.

    If they add a £50 renewal fee or simply increase the insurance premium by £50 it makes no difference!. It is still £50 more!.

    Plus your very naive to think you have never paid a "renewal fee". If you have ever renewed car insurance with the same company they will have had a cost of the administration of updating the MID and sending out policy documents. This cost will have been included In your premium. So just because they haven't broken down the cost of your insurance to show the cost of administration, you have still paid it!
    You think what you like Tak!

    I am far from naive when it comes to insurance underwriting - I spent half a career doing it!

    What you, on the other hand, have failed to grasp is the obfuscation created by the various flavours of the middleman role. You talk about "insurance companies" as if they are each a single entity both taking the underwriting risk and doing all the administration, yet competing separately via a single channel in a completely open market, and from whom you, Joe Public buys the product. WRONG!

    You clearly don't realise that you buy from a brand and that the brand is in many cases not an underwriter at all, just a re-packager, specialising in wrappers to fool you good!

    Clever buyers find out who actually their insurance contract is with, then find the channel that allows them to buy at trade prices, not Knightsbridge fancy outlet full designer retail exclusive limited edition new with tags prices!

    Once you have established that, I suggest someone like Quidco is worth at least checking to see if you can get a further £50 or £75 cashback as opposed to a further £50 sting by buying through a re-packager :p
  • takman
    takman Posts: 3,876 Forumite
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    agarnett wrote: »
    You think what you like Tak!

    I am far from naive when it comes to insurance underwriting - I spent half a career doing it!

    What you, on the other hand, have failed to grasp is the obfuscation created by the various flavours of the middleman role. You talk about "insurance companies" as if they are each a single entity both taking the underwriting risk and doing all the administration, yet competing separately via a single channel in a completely open market, and from whom you, Joe Public buys the product. WRONG!

    You clearly don't realise that you buy from a brand and that the brand is in many cases not an underwriter at all, just a re-packager, specialising in wrappers to fool you good!

    Clever buyers buy at trade prices, not Knightsbridge outlet full designer retail exclusive limited edition price!

    You seem to be trying to make a point that is irrelevant to this discussion!. In your first post you quite clearly seemed to think that by them charging these "extra" fees that it made the insurance premium more expensive. My point is that it doesn't matter what fees they charge the total price is all that matters.

    Also i think any half intelligent person realises that Tesco, Sainsbury's, M&S do not underwrite car insurance and i don't even see how it is relevant to this discussion. My main point that only the total price matters is still relevant!.

    In the case of my Car insurance it was actually slightly cheaper for me to go with a brand name than it was to go direct with the underwriter!.

    But as you seem to think that i must be overpaying for my car insurance. How much do you pay for your car insurance and how much is the cheapest price that you could get from a price comparison site?.
  • agarnett
    agarnett Posts: 1,301 Forumite
    edited 14 July 2016 at 1:57PM
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    takman wrote: »
    You seem to be trying to make a point that is irrelevant to this discussion! ... etc. etc.
    I will admit I have fallen into the trap of talking about pricing levels, but you seem to be totally fixated on price rather than on injustices of commercial malpractice (wrongdoing).

    Are you one who knows the price of everything, and ... etc...?

    How many motor insurance claims have you experience of presenting and seeing to a conclusion? (just to remind that that's the other side of the deals people do :p).

    When I said clever buyers buy at trade prices, I should also have prefixed that by urging that clever buyers discern between products and players and wrappers and outsourced services and then buy their preferred package (not the cheapest) at as close to trade price as possible.
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