Administration Fees

Sportyrich2000

I'm trying to find out what might be considered an excessive Administration fee.  Having researched this area everything points to the fact that Administration Fees should reflect the work done and nothing more.  I am changing something minor on a car insurance policy and there is an Administration Fee of £20.  As I am the one completing the Admin by doing this online I am a little confused at this Admin Fee reflecting the work done - nothing by the company.  Is there a legal aspect to this charging or is it something that 'just happens' and that we accept?  Seeking the knowledge just for knowledge sake to some extent (from a point of vie of The Grumpy Old Man!) but also a possible negotiating position to go back to my insurance company and ask them to not charge it.

Woodstok2000

There is a legal aspect, the fees have to be reasonable, reflect the work done and be disclosed up front.

Doing things online is generally cheaper (my insurance admin fees for online changes are about 50% of the phone costs) but it still may not be free. There may be back-endchecks and processing to pay for, plus the costs for IT setup and maintenance.

You can always ask them to waive it, but £20 doesn't seem like it would breaking the rules so would be at their discretion.

MyRealNameToo

Sportyrich2000 said:

I'm trying to find out what might be considered an excessive Administration fee.  Having researched this area everything points to the fact that Administration Fees should reflect the work done and nothing more.  I am changing something minor on a car insurance policy and there is an Administration Fee of £20.  As I am the one completing the Admin by doing this online I am a little confused at this Admin Fee reflecting the work done - nothing by the company.  Is there a legal aspect to this charging or is it something that 'just happens' and that we accept?  Seeking the knowledge just for knowledge sake to some extent (from a point of vie of The Grumpy Old Man!) but also a possible negotiating position to go back to my insurance company and ask them to not charge it.

Firstly, the regulator has generally been in support of admin fees, it generally considers it better that people that make use of a service are the ones that pay for it rather than charging everyone more irrespective if they go 10 years without making an amendment or make 10 changes a year. 

Secondly the cost can be based on an average, again the regulator thinks the certainty of being able to tell customers before they've even bought the policy that any change will cost £20 than having a complex calculation that means a change could cost anywhere from £0.50 to £150.

Finally the cost isnt just the 10 minute call to a call centre agent on £16/hr but its everything that goes around that... the team leader that manages that person, the compliance person listening in to 1 in 20 calls, the manager of the compliance person, the payroll person paying them, the IT Helpdesk person to support them if the system doesnt work, the office, lighting, heating, desk, maintenance guy to fix any of those etc. 

Websites arent free, off the shelf software can come with licence fees based on volumes, in house built solutions are armies of staff supporting them. Also not everything is always what it seems, when we first introduced self service on our website it didnt actually do anything really, as it literally just sent an email to a newly created team and a member of staff then had to key the proposed change into the policy administration system. So whilst the customer may have thought they updated their name themselves in reality a member of staff had done it in the background. 

born_again

Sportyrich2000 said:

I'm trying to find out what might be considered an excessive Administration fee.  Having researched this area everything points to the fact that Administration Fees should reflect the work done and nothing more.  I am changing something minor on a car insurance policy and there is an Administration Fee of £20.  As I am the one completing the Admin by doing this online I am a little confused at this Admin Fee reflecting the work done - nothing by the company.  Is there a legal aspect to this charging or is it something that 'just happens' and that we accept?  Seeking the knowledge just for knowledge sake to some extent (from a point of vie of The Grumpy Old Man!) but also a possible negotiating position to go back to my insurance company and ask them to not charge it.

While you maybe doing it online. It does not mean that a human at the other end has to update another system for the change at underwriters end of the policy.

Mildly_Miffed

Those fees will have been listed in the documentation you got at the start of the policy - the ones you had a legal right to cancel the policy within 14 days of receiving...