Santander/Aviva make changing from Yearly DD to Monthly bizarrely difficult - why?

lesley2020

Santander (who seem to use Aviva for the buildings insurance) upped the yearly payment, so I called them to ask for it to be switched to monthly. Not usually a problem with other types of insurance e.g. car.

Scottish voice said that 'the option was not available on my policy', so I what needed to happen for the option to be visible. 'I could clone your policy and set up a new type of payment for that - but I haven't had to do many of those so far'.

She went away, then came back after some time and said 'well, as part of the cloning procedure I'd have to speak to the Underwriters - and they don't work weekends'.

Given that nothing has changed re the policy, and I haven't had any claims, anyone have any idea why Aviva/Santander would make it so hard to change to monthly payment? It is not like they lose money for doing so, as they would charge some kind of interest/fee.

Thanks

Brie

Paying yearly be DD is just that, a yearly payment to buy something that lasts a year. 

Changing to monthly means that you want to buy the policy now but pay over the next 12 months so that means a credit agreement as it is affectively setting up a loan.  Why that needs to go to the underwriters is a bit of a mystery - unless going monthly makes you a greater risk to insure?

lesley2020

"you want to buy the policy now but pay over the next 12 months so that means a credit agreement as it is affectively setting up a loan"

- given you can cancel the policy at any time (which you obviously couldn't do if you were e.g. paying for a £200 item which you could never return) I don't think that comparison works in this case.

"Why that needs to go to the underwriters is a bit of a mystery" - yes, and that's the question in my mind that led to me posting. Maybe someone with expertise in underwriting can explain.

But again - why does this not apply to e.g. car insurance, but does to (Santander/Aviva) buildings insurance, if it all revolves around 'risk to insure'.

I guess I am really trying to find out if this is just a Santander/Aviva thing.

I also ask myself whether we really need all this secrecy from these financial institutions? Why don't they just publish a (long) list of the factors which could lead to policy prices rising/falling/ being cancelled? At least then people would have a clear idea of do's and don'ts.

It is this kind of frustrating behaviour by financial organisations in the past couple of decades which IMHO has made life more difficult for so many ordinary people.

TELLIT01

There is a difference between a policy being paid from the outset in monthly instalments and  changing a policy currently being paid by a single lump sum in advance to monthly payments.  As has been said above, a credit agreement is required and there will also probably be additional costs to include in the price.  Credit checks need to be made etc and that may be the role of underwriters. 

dunstonh

Santander/Aviva make changing from Yearly DD to Monthly bizarrely difficult - why?

 
Some plans may have easily interchangeable options with a streamlined method to move between them.  Others may not.    You may even have a policy that targets annual payers with no credit facility.

Given that nothing has changed re the policy, and I haven't had any claims, anyone have any idea why Aviva/Santander would make it so hard to change to monthly payment? It is not like they lose money for doing so, as they would charge some kind of interest/fee.

If you change policies at renewal then it is easy as the new product will give you the payment method of your choice.   You are asking to change the existing product that doesn't have a monthly payment loan method available.

And yes, they may lose money.   If their distribution method on that particular plan is costed to have single premiums only with no credit facility then you asking for one is going to create extra costs that will not be recovered by an increase in the premiums to cover the interest (which is often at sub-prime levels).

But again - why does this not apply to e.g. car insurance, but does to (Santander/Aviva) buildings insurance, if it all revolves around 'risk to insure'.

It does apply to car insurance. 

I guess I am really trying to find out if this is just a Santander/Aviva thing.

No its not.

I also ask myself whether we really need all this secrecy from these financial institutions? Why don't they just publish a (long) list of the factors which could lead to policy prices rising/falling/ being cancelled? At least then people would have a clear idea of do's and don'ts.

What secrecy?
Factors are well known.   How much an insurer will adjust pricing for different risks is commercially sensitive.

Do you go to your supermarket and ask for a breakdown of the costs and influences of costs on a tin of beans?

It is this kind of frustrating behaviour by financial organisations in the past couple of decades which IMHO has made life more difficult for so many ordinary people.

Or perhaps you are being unreasonable.

If you bought a black and white TV, do you moan that it cannot do ultra HD  when you want that option later on?

lesley2020

TELLIT01 said:

There is a difference between a policy being paid from the outset in monthly instalments and  changing a policy currently being paid by a single lump sum in advance to monthly payments.  As has been said above, a credit agreement is required and there will also probably be additional costs to include in the price.  Credit checks need to be made etc and that may be the role of underwriters. 

Again, read my original post - the question is why would it be no problem with e.g. a motor insurance policy but a major problem with a (Santander/Aviva) buildings policy. Exactly the same situation in both.

Hopefully someone with actual experience of working in insurance will reply and illuminate us both.

lesley2020

dunstonh said:

But again - why does this not apply to e.g. car insurance, but does to (Santander/Aviva) buildings insurance, if it all revolves around 'risk to insure'.

It does apply to car insurance. 

Haven't got time or inclination to reply in detail to an answer that seem to be totally based on on guesswork, I'm looking for someone who has expertise of working in the industry and so can answer this question for the benefit of all of us.

Not exactly sure why you say "It does not apply to car insurance" when my original post clearly states that the whole reason for me posting this question was because... it did not apply in the case of my car insurance. Maybe re-read?

Wonka_2

lesley2020 said:

Again, read my original post - the question is why would it be no problem with e.g. a motor insurance policy but a major problem with a (Santander/Aviva) buildings policy. Exactly the same situation in both.

Hopefully someone with actual experience of working in insurance will reply and illuminate us both.

Ouch - given the detail some of the respondents have given you seem to have misread the room if you think they don't

You've been told clearly that you can't make an assumption that policy A follows the same terms as policy B - even within the same company let alone across business lines e.g motor to home

If you 'need' to do this now, mid policy, and they're telling you it's not possible then it's probably personal loan time (potentially at a lower rate than the insurer would offer) and then make sure that when renewal time comes you pick an policy with appropriate payment methods (or flexibility)  

Hoenir

Underwriters are empowered by their employers to make financial decisions on behalf of the company within prescribed limits. Any form of the granting of a credit facility or the agreement to deferred payment terms. Will require evaluation and assessment of the risk posed to the company. For extended payment payment terms only reasonable that those requesting same incur the financial cost. 

Someone owes you £300. Would you prefer £300 tomorrow. Or £25 a month over the next 12. Knowing that the person who has the money has placed it on deposit and is earning interest for themselves. While you are running an overdraft at considerable cost. 

lesley2020

Wonka_2 said:

Ouch - given the detail some of the respondents have given you seem to have misread the room if you think they don't

I'm not 'reading the room', I'm asking a sensible question which I hoped would elicit some informed comments and maybe even a correct answer (but then I'm not someone who spends half their life in online forums - maybe this is par for the course nowadays?)

"If you 'need' to do this now, mid policy, " - read the original post - it is not 'mid-policy' it is at renewal time.

I'll restate the original question, in a way which possibly makes the comparison easier to understand for some people:

Policy A (for £400 p.a.) is buildings insurance, and has been yearly DD. Renewal time has come and I asked for it to be changed to monthly payments. Santander/Aviva say this is not possible without getting the Underwriters involved

.

Policy B (for £1200 p.a.) is car insurance, and has been yearly DD. Renewal time has come and I asked for it to be changed to monthly payments. Aviva say this is perfectly possible without getting the Underwriters involved, and do this within 2 minutes.

The only variables in the above are Buildings vs. Car, and Santander using Aviva vs Aviva direct. The price is higher for the Car example, yet results in a positive outcome - so can be discounted as a factor I assume.

Q: From your practical knowledge of the workings of the insurance industry, which of the two variables results in the different outcome (and why?)

Anyone who answers with a clearly informed comment I shall be more than happy to thank and reply to.

Simples, no?

Devongardener

I think you need to have some respect for the people here who are trying to help you.  You didn’t say in your original post that you only wanted replies from people with knowledge of the insurance industry, so it’s inevitable that you will receive advice from a wide range of experience.