Insurance without Fees??

d0nnyoz

I don't generally post on here but I felt I needed to ask someone about this.

I was looking into renewing my motorbike insurance and was reading the article on MSE about that.
I looked at my policy from last year and the premium was £42 plus an Administration Fee of £30. Firstly, that slightly disgusted me!
So I did all the research for new insurance for this year and the cheapest policy I could find was £143 (I managed to get 6 points on my license about 10 months ago!). But in the small print again I noticed an Admin Fee of £35!! I started to think this is just a joke.

The MSE article states there are policies that do not include Admin Fees but I cannot seem to find any. I feel this is a racket by the insurance companies and wondered if there are insurers out there who do not charge fees on top of the policy premium, or what can be done about this?

dunstonh

I looked at my policy from last year and the premium was £42 plus an Administration Fee of £30. Firstly, that slightly disgusted me!

Why would it disgust you? Were you expecting it for free?

But in the small print again I noticed an Admin Fee of £35!! I started to think this is just a joke.

Again, why do you think it's a joke? Very strange thing to say.

The MSE article states there are policies that do not include Admin Fees but I cannot seem to find any. I feel this is a racket by the insurance companies and wondered if there are insurers out there who do not charge fees on top of the policy premium, or what can be done about this?

It is not a racket. It's just that you don't understand and have jumped to conclusions.

Yes, there are insurers out there that do not charge an explicit fee. However, they will have commission factored into the premium. Which is the old-fashioned method. Explicit fees can lead to cheaper insurance and it's more transparent. However, if you think that's a racket, then fair enough.

Isthisforreal99

Do you work for free OP?

Thought not, but you expect others to.

d0nnyoz

Jeez! I think these responses have reminded why I don't use this forum too much. You come on here looking for constructive help and all you get is flak!

These companies are selling a service and I believe the total price should reflect the cost to them as a business. Its like when you used to buy rail/air tickets and they charged you extra at the end of the transaction for using a card. Outlawed!!

And charging £30 on top of a £42 premium is disproportionate, IMO.

XRS200

Who is charging the fee? Insurer or broker?

user1977

Why do you think the admin would be proportionate to the amount of the premium?

Would you be happier if they just said the total price is £72 and didn't break it down at all?

d0nnyoz

https://forums.moneysavingexpert.com/discussion/comment/82042513#Comment_82042513

I think this is a 'broker' in the true sense of the word. Its with Express Insurance Services so I assume they are a broker as opposed to an Insurance company.

The very small print on the policy states: "This quote includes a non-refundable arrangement fee of £35.00 and Insurance Premium Tax at the current rate."

I do understand the these companies need to make money to exist but my arguement is that the total premium should reflect the total cost of the service, including the insurance premium and any other costs involved in providing that policy. I can now see the error in my view as it will either be a total premium of £42 plus £30 admin fee, or just a total fee of £72. Same thing.

dunstonh

Jeez! I think these responses have reminded why I don't use this forum too much. You come on here looking for constructive help and all you get is flak!

The responses follow the tone you set in your post. If you had been more constructive in your post, then the replies would have followed a more constructive tone. Instead, you went for exaggerated judgment.

These companies are selling a service and I believe the total price should reflect the cost to them as a business. Its like when you used to buy rail/air tickets and they charged you extra at the end of the transaction for using a card. Outlawed!!

Your belief is wrong. You seem to think that combining the cost of retail and manufacture into a single price and not telling you the difference is a good thing.

The product has manufacturing costs and retailing costs. Those that charge a fee are showing the difference between retail and manufacturing.

Again, you seem to fail to understand that those charging a fee are not receiving a commission. Those that do not charge a fee receive a commission. Combining retail costs and manufacturing costs into a single price doesn't mean you are going to pay less.

And charging £30 on top of a £42 premium is disproportionate, IMO.

Why? If they're charging £30 for doing their work then it doesn't matter if the premium is £42 or £420 or £4,200. Their work costs £30, and it's the same for everybody who uses them.

Why should they charge those paying a £30 premium less than those paying a higher premium when it is the same level of work?

d0nnyoz

https://forums.moneysavingexpert.com/discussion/comment/82042532#Comment_82042532

I think charging nearly 42% of the total premium is a little extortionate but I also understand that the cost of providing any policy might be whatever it costs (whether I think £30 to provide a templated policy is extortionate or not). It would seem that paying 42% of a policy premium seems a lot to me. If the policy premium was say £300, then £30 might be reasonable. Personally, I would have thought maybe a percentage value might be better, like say 10%?? That way they make more money from larger premium whilst not seemingly over-charging for a cheaper policy.

But I'm still slightly annoyed with this 'admin fee' practice. Would rather just have a total insurance premium rather than a premium plus charges/fees.

XRS200

I think you are missing the point. A flat fee is much fairer than a percentage. A fee is intended to reflect the admin involved so a percentage would be very unfair.

The broker maybe gets commission of 10% of the premium so wouldn't exist if they only earned about £4. I doubt there is much profit for them even with a £35 fee.

d0nnyoz

https://forums.moneysavingexpert.com/discussion/comment/82042594#Comment_82042594

So its Ok for their commission to be based on a percentage, so the bigger the premium, the more they earn (for very little extra effort) but not for an 'admin fee'?
It would be interesting to hear your view on whether you think charging 42% of the premium on a total value of £72 is just as fair as charging the same amount for a premium of say £500? I think any rational person would see this as unfair.