Cancellation fees. Rip off?

yomagsy

I sold my car so asked Swinto to refund me the unused 6 months left. They will do this but will deduct a £50 cancellation fee on my £200 a year annual premium !!  
 In this age of computers, how can they justify these costs ??

dunstonh

I sold my car so asked Swinto to refund me the unused 6 months left. They will do this but will deduct a £50 cancellation fee on my £200 a year annual premium !!  

Not sure why you find that incredulous.  All quite normal.

In this age of computers, how can they justify these costs ??

You think computers magically appear and do things automatically?   
I suspect you do not run a business or are not involved in management roles where you learn that things cost money.

DullGreyGuy

yomagsy said:

I sold my car so asked Swinto to refund me the unused 6 months left. They will do this but will deduct a £50 cancellation fee on my £200 a year annual premium !!  
The breakdown company also want £8 fee to change my registration to my new car. In this age of computers, how can they justify these costs ??

How much do you think it cost them to set up the policy? Confused.com etc tend to charge £50+ plus they advertise elsewhere, have IT systems, staff to maintain that system, employees waiting to take your call.

Swinton are a broker, if they get 10% commission they are doing well on Motor 

dil1976

yomagsy said:

I sold my car so asked Swinto to refund me the unused 6 months left. They will do this but will deduct a £50 cancellation fee on my £200 a year annual premium !!  
The breakdown company also want £8 fee to change my registration to my new car. In this age of computers, how can they justify these costs ??

I take it you have never had to pay for any  device that connects to the internet, including software, software upgrades maintaining of the systems, internet connections etc?

yomagsy

dunstonh said:

I sold my car so asked Swinto to refund me the unused 6 months left. They will do this but will deduct a £50 cancellation fee on my £200 a year annual premium !!  

Not sure why you find that incredulous.  All quite normal.

In this age of computers, how can they justify these costs ??

You think computers magically appear and do things automatically?   
I suspect you do not run a business or are not involved in management roles where you learn that things cost money.

You make too many assumtions. I did run a business til I retired, I have 4 sons who are programmers / system achitects so yes, I do understand computers, business and how details are amended via computers. Being rude about not learning that things cost money is not helpful. 

yomagsy

dil1976 said:

yomagsy said:

I sold my car so asked Swinto to refund me the unused 6 months left. They will do this but will deduct a £50 cancellation fee on my £200 a year annual premium !!  
The breakdown company also want £8 fee to change my registration to my new car. In this age of computers, how can they justify these costs ??

I take it you have never had to pay for any  device that connects to the internet, including software, software upgrades maintaining of the systems, internet connections etc?

Of course I pay for all the things you mention and do understand their cost but I don't remember paying so much for a cancellation before, 25% of an annual premium. 

yomagsy

DullGreyGuy said:

yomagsy said:

I sold my car so asked Swinto to refund me the unused 6 months left. They will do this but will deduct a £50 cancellation fee on my £200 a year annual premium !!  
The breakdown company also want £8 fee to change my registration to my new car. In this age of computers, how can they justify these costs ??

How much do you think it cost them to set up the policy? Confused.com etc tend to charge £50+ plus they advertise elsewhere, have IT systems, staff to maintain that system, employees waiting to take your call.

Swinton are a broker, if they get 10% commission they are doing well on Motor 

Of course I don't know how much it costs to set it up which is why I ended my question with a question mark. All businesses have costs and a profit to make (I used to run my own business) but I thought a 25% charge to cancel a contract mid term was a tad expensive. Swinton told me that they only pass on the charge that the insurance company sets.

dil1976

yomagsy said:

dil1976 said:

yomagsy said:

I sold my car so asked Swinto to refund me the unused 6 months left. They will do this but will deduct a £50 cancellation fee on my £200 a year annual premium !!  
The breakdown company also want £8 fee to change my registration to my new car. In this age of computers, how can they justify these costs ??

I take it you have never had to pay for any  device that connects to the internet, including software, software upgrades maintaining of the systems, internet connections etc?

Of course I pay for all the things you mention and do understand their cost but I don't remember paying so much for a cancellation before, 25% of an annual premium. 

You will still have to pay to set the policy up and also to amend it so they are 2 costs the company need to cover, then their is the admin fees for sending letters stating NCB and also the policy has been ended by yourself. Then their is paying for the buildings these companies base themselves in and everything that comes with that.

So £50 for all of that isn't a unreasonable cost is it? I take it the £50 is a standard fee for all policies and isn't it?

SiliconChip

yomagsy said:

dil1976 said:

yomagsy said:

I sold my car so asked Swinto to refund me the unused 6 months left. They will do this but will deduct a £50 cancellation fee on my £200 a year annual premium !!  
The breakdown company also want £8 fee to change my registration to my new car. In this age of computers, how can they justify these costs ??

I take it you have never had to pay for any  device that connects to the internet, including software, software upgrades maintaining of the systems, internet connections etc?

Of course I pay for all the things you mention and do understand their cost but I don't remember paying so much for a cancellation before, 25% of an annual premium. 

But it's a fixed charge, not a percentage of the premium, you'd have been charged £50 whether your premium was £200 or £2000. The time to be concerned about the level of fees is before taking out the policy, not while you're on cover. Surely when you were running a business you read and understood contracts before signing them, not afterwards?

DullGreyGuy

yomagsy said:

DullGreyGuy said:

yomagsy said:

I sold my car so asked Swinto to refund me the unused 6 months left. They will do this but will deduct a £50 cancellation fee on my £200 a year annual premium !!  
The breakdown company also want £8 fee to change my registration to my new car. In this age of computers, how can they justify these costs ??

How much do you think it cost them to set up the policy? Confused.com etc tend to charge £50+ plus they advertise elsewhere, have IT systems, staff to maintain that system, employees waiting to take your call.

Swinton are a broker, if they get 10% commission they are doing well on Motor 

Of course I don't know how much it costs to set it up which is why I ended my question with a question mark. All businesses have costs and a profit to make (I used to run my own business) but I thought a 25% charge to cancel a contract mid term was a tad expensive. Swinton told me that they only pass on the charge that the insurance company sets.

As with anything in business you have a choice, you can increase your prices for everyone to cover the costs incurred by some (eg for credit card fees this is a legal requirement) or you can chose to only bill those that cause the cost and let those that dont use it not pay for it (or only part pay for it). 

Most setup costs for mass market consumer policies are fixed outside side of brokerage (and that's only from the insurers perspective) and so doesn't mater if its a £200 or £2,000 car insurance policy you still pay Google £20 a click and £50+ to aggregators etc. There is therefore a strong argument that fees should be based on a fixed rather than percentage basis.

There is an argument however that perhaps it should be a sliding scale as if you cancel in week 3 all the marketing costs are sunk and almost all the premium is returnable whereas a cancellation in week 51 you've gotten almost everything out of it. However this is complex to explain to customers and certainly with my prior client they simply gave a weighted response because most cancellations are front loaded meaning an average fee of £50 

There are insurers out there that dont charge fees, not many brokers dont, so if its important to you then you can chose one of them but you may find you are paying more premiums for the option of cancelling it for cheaper if you need to. The nature of individual risk assessment however doesn't automatically mean it'll be so though.

rigolith

dunstonh said:

I sold my car so asked Swinto to refund me the unused 6 months left. They will do this but will deduct a £50 cancellation fee on my £200 a year annual premium !!  

Not sure why you find that incredulous.  All quite normal.

In this age of computers, how can they justify these costs ??

You think computers magically appear and do things automatically?   
I suspect you do not run a business or are not involved in management roles where you learn that things cost money.

Normal but still a massive rip off. Unless they go out of their way to have an inefficient system it doesn't cost then £50 to cancel a policy and issue a partial refund.