£169 for less than a months car insurance after cancelling!

tabath

Hi

I took a car insurance policy out for a car I had which I was going to get reMOTed and give it to my daughter. Anyway she decided as she was going to Uni and wouldn't need a car there it just was not worth the hassle.

I had been directed to this insurer via one of the comparison sites linked to on the insurance thread on this site.

The Insurance Company was ERS but it was through a broker Fluxdirect(https://www.adrianflux.co.uk)


On phoning them to cancel today I get told after paying £365.88 my refund is going to be £196.34.

Thats about £169 for lessthan a months insurance!!

I asked how they came to this total and was told:

£70 broker setup fee
£25 broker cancellation fee
£28.52 broker commission

£27 Insurance company cancellation fee
£46.02 prorata charge for the policy.

This seems to be verging on the criminal - is this normal? Is there anything I can do ? Is it worth complaining to the FCA?

Thanks for any info you can give.

dunstonh

This seems to be verging on the criminal - is this normal?

Nothing seems to be an issue there.

Is it worth complaining to the FCA?

The FCA do not handle consumer complaints and there doesnt appear to be anything wrong.

Firstly, you used a broker. The broker is entitled to be paid for the work they do. As long as their charges reflect their published tariff then they are fine.

Secondly, the insurer has a right to charge cancellation fees. £27 is fine. The FOS publications have shown them accept £50 as being reasonable. So, £27 is well under that. The premium for time on cover will be relatively pro-rata but not exact. it is only exact during the cancellation rights period. After which, there will be some rounding.

Charges tend to be heavier at the front end of the policy and less at the tail end reflecting that the biggest cost is the initial setting up.

When you buy insurance, it is important to understand what you are buying. Going for cheapest premium can mean you pay more in admin & cancellation charges.

tabath

Thanks for the reply. I understand the £27 cancellation fee from the insurance company is resonable but then to be charged a cancellation fee form the broker on top as well as £98 in setup and commision fees does not seem proportionate. The brokers fees come to more than a third of the total policy cost for the year!!! I can't see the insurance actually surrendering a third of the policy cost to the broker if this policy had run for the full year?

paddyandstumpy

You may be surprised, but that's their commission. 30% on motor is high, but not unheard of.

Don't forget the insurer doesn't then have the cost of admin, staff, advertising etc. That's why they pay a commission to the Broker, to do that for them.

dunstonh

I understand the £27 cancellation fee from the insurance company is resonable but then to be charged a cancellation fee form the broker on top as well as £98 in setup and commision fees does not seem proportionate.

you employed a broker. So, why do you think it is fair that the insurance company should be paid for admin but the broker isnt?

The brokers fees come to more than a third of the total policy cost for the year!!!

Explicit charging can appear disproportionate on lower premiums but that is how explicit charging works. If you went by percentages, those with higher premiums would be moaning why they should pay more than those with smaller premiums when the work is the same.

I can't see the insurance actually surrendering a third of the policy cost to the broker if this policy had run for the full year?

It wouldnt have done.

1 - the broker set up fee is waived if you go the full term. Its a marketing discount but you are breaking the contract.
2 - if you dont cancel then you wouldnt have paid the cancellation charges.
3 - the broker commission would have been paid in full to the broker by the insurer. A cancellation means it is fully clawed back.

I don't disagree with you that the figures look high. Had you not used a broker, then you would have likely paid just around £27 and the premium used up.

Broker policies can be good if you plan to maintain them for the full term. They are more expensive when you cancel early as there are two tiers of charges to consider.

tabath

Thanks for your explanation.

I stoppped using brokers for insurance policies quite a while ago . I actually did not realise till I received the paperwork that this policy was issued through a broker! I just thought that by using a comparison site I was avoiding brokers anyway as I stopped using brokers because they had never previously provided a cheaper quote for quite a few years. So why would they be abe to provide a cheaper quote on a comparison site?

I think the moral of this is I must never use a broker again and if I find I have accidentally done this then cancel them straight away.

paddyandstumpy

tabath wrote: »

I just thought that by using a comparison site I was avoiding brokers anyway as I stopped using brokers because they had never previously provided a cheaper quote for quite a few years.

What made you think that?

tabath wrote: »

I think the moral of this is I must never use a broker again and if I find I have accidentally done this then cancel them straight away.

Why not? If they could never provide competitive insurance and help clients they wouldn't be in business.
And why cancel if you find out you've insured via a Broker? Surely this problem has only occurred because you cancelled...??

dunstonh

I think the moral of this is I must never use a broker again and if I find I have accidentally done this then cancel them straight away.

No. The broker would have been cheaper if you had fulfilled the contract. So, if you know you are not going to cancel then its not a problem.

So, avoiding them all the time is counterproductive.

I just thought that by using a comparison site I was avoiding brokers anyway as I stopped using brokers because they had never previously provided a cheaper quote for quite a few years. So why would they be abe to provide a cheaper quote on a comparison site?

Brokers and advisers can beat the comparison sites in some areas. Plus, in some product areas, comparison sites are very poor value. They are a tool to compare a selection but they are not whole of market. What this company appear to be doing is waiving part of their set up costs to bring the overall cost down which in turn pushes them up the comparison site to the top/near top.

pinkteapot

To be fair to the OP, Adrian Flux have a pretty shocking record on cancellation charges and general treating the customer fairly - see the results on https://www.google.co.uk/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=adrian%20flux%20cancel

OP - as others have said, cheapest doesn't always mean best, especially when it comes to customer service. Use comparison sites with caution, and when you find a cheap company check out reviews or ask about them on here. It can be hard because there are bad reviews for every company online (there's always a minority of disgruntled customers!) but much of what's been written about Adrian Flux online is negative!

rudekid48

Check your paperwork and the terms that you agreed to when purchasing the policy.

If what you have been charged does not tally with the paperwork then you have grounds for a complaint which you can then escalate to the FOS after 8 weeks or if you remain unhappy with their response.

If the charges DO tally with the terms that you accepted when purchasing then you have nobody to blame but yourself for agreeing to those terms.....

Rolandtheroadie

Same thing happened to me with Adrian Flux.
I went with them as they were mirroring my NCB on a second car.
I had it approx 3 months, and got a similar refund on a similarly priced policy.
To be honest, I was expecting it and would use them again for a second car.