Insurance without Fees??

XRS200

I think charging a flat fee for arranging a policy is fair, regardless of the premium.

dunstonh

https://forums.moneysavingexpert.com/discussion/comment/82042584#Comment_82042584

I take it you've never run a business in your life. And especially at the moment when regulation and costs are at all-time highs.

Personally, I would have thought maybe a percentage value might be better, like say 10%?

Okay, so for a £42 premium that includes 12% IPT, which is £4.50. So the premium before IPT is £37.50. 10% of that is £3.75.

Unless you're living in 1950, £3.75 before costs is not viable.

That way they make more money from larger premium whilst not seemingly over-charging for a cheaper policy.

Firstly, they're not overcharging for a cheaper policy. They cannot be overcharging when everyone is paying the same fee. The model you're proposing is effectively overcharging everybody with higher premiums just so you can get it cheaper. You are asking for those people to subsidise you.

Your argument is really that you want everyone else to pay for you, and that's why you consider it unfair because you're not getting that anymore.

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/comment/82042461#Comment_82042461

The problem is that there is a lot of fixed costs, if you are using the likes of confused.com they charge circa £30 per sale to the vendor, motorbike insurance typically is paying circa 20% commission so your broker is only getting £7 for the sale. Software houses charge a couple of pounds per sale and so even before you are paying your rent, staff, compliance etc the £7 revenue is having to cover £35+ of cost of sales, which obviously it doesnt.

Given the high cost of selling a policy, £42 simply isnt viable as a premium. Be somewhat thankful its only £30 admin fee… in my world many insurers won't write anything for less than a mid 5 figure sum as it simply doesnt stackup to play in lower premiums

Weighty1

https://forums.moneysavingexpert.com/discussion/comment/82042584#Comment_82042584

Would you be saying the same if your premium was £1,000/year and suddenly your admin fee went from £30 to £100?

No, you just want others to be burdened with the cost from the sounds of it.

Whether you can see them or not there are a whole host of costs which come from running a brokerage and that money is covered either via fees or commission. Ultimately though, you are concerning yourselves with things that are irrelevant because if you found out that every brokerage that didn't charge an admin fee was double the cost of those that did you wouldn't go with them anyway.

To you as the consumer, the cost is the cost, irrespective of how it is made up.

d0nnyoz

OK, I take your point regarding a percentage fee.
I'm not really, and wasn't looking at it like that, where everyone else essentally subsidides my fee, but I can see that this might seem unfair. But the bigger picture for me is that I am the lucky one with a lower premium and we all know in life, there are winners and losers whenever it comes to finance. I completely accept that I would be a winner with that pricing model and there would be losers. Such is life!

And to @dunstonh , thanks for the comment on business. I've run my own business,successfully, for the past 15 years. These models do work, its just you've obviously taken a dislike to me and have offered nothing but critisim of my comments. Oh well, I'm tough skinned (need to be in business! 😉).

I'll leave this now as nothing constructive coming from it.
I was just surprised that almost everyone charged as I seem to remember this was never an add-on in my day!

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/comment/82044078#Comment_82044078

But was that a business that required regulation from both the PRA and FCA? Potentially the CoL too if you operate in Lloyds.

The FCA in particular requires transparency, fairness to customers etc at its core. It historically has made decisions based on the balance of impact to all customers and accepted some of its decisions (eg renewal pricing) will have negative impacts on some customers.

Generally the FCA sees fixed fees that can be published in advanced as the better option as it's overt and predictable. They also accept that means some will overpay and some underpay but consider it fairer than being a "at cost" type price meaning nothing can be published up front or the variability that a percentage fee would be given a mid term adjustment could more than double a premium (eg your teenage kid passes their test) which would mean cancellation fees etc also double.

The other "advantage" of fees is that only those that use the service pay for the service, those who dont charge cancellation fees arent just magically not having to lose their marketing expenses etc but instead are increasing everyones premiums to factor in the person that buys a policy, incurs the insurer £100 of costs and then cancels the next day.