Insurance Fees - Changes & Cancellation

Caz6

What are peoples views on the fees insurance comapnies charge when you make a change/cancel you policy? Are they also unfair contract terms like the exit fees on mortgages which Martin is currently pushing? Examples from my experiences today:

I've just moved in with my boyfriend so called my car insurer to change my address (a legal requirement I believe), the admin charge for doing so was £20!!! It's crazy but I had to do it - I had no choice!

I also cancelled my old contents insurance policy as my boyfriend has one already and was due a refund of c£40 but after they'd deducted their cancellation admin fee of £30 my refund was quickly depleted to £10!

Are these charges fair? If not how can I challenge them?

dunstonh

What are peoples views on the fees insurance comapnies charge when you make a change/cancel you policy?

Pretty obvious I would think from the number of posts we get on the subject each week.

Are they also unfair contract terms like the exit fees on mortgages which Martin is currently pushing?

Not even close to being similar. A read of the recent threads, including one that has had posts today would explain that.

I've just moved in with my boyfriend so called my car insurer to change my address (a legal requirement I believe), the admin charge for doing so was £20!!! It's crazy but I had to do it - I had no choice!

Ok, lets go back to the old way and everyone can pay higher premiums and no amendment/cancellation fees. For more profitable to the insurers and everyone is worse off, not just those who pay the fees.

Are these charges fair?

Yes.

how can I challenge them?

You cannot. They are published and documented and admin fees for services are allowed. People have tested it with the FOS and been rejected when the fee is a reasonable size. Anything upto £50 is generally considered reasonable (not including adjustment in premium due to increased risk).

lisyloo

They are entirely legal as they are admin fees.
Sorry to sound harsh but what is crazy is signing up to a contract you don't like and then complaining about it. Did you not read the important points? (I realise the whole thing can be long winded but it's not that hard to find the important bits).

They are legally fair as they cover the admin.
They are morally fair (in my opinion) as the cost was stripped out of your up front premium and you received a lower premium for it not being included.
£20 is quite low compared with others.

If you have a strong objection to these I suggest you read contracts more closely or if you don't want to scour the net then look at https://www.matthewsguide.co.uk which will provide the info at very low cost to save you the effort.

You have to pay for your share of the following and with £20 I reckon you got off lightly.

staff time
their pension
their tax & NI
time off e.g. sick, holidays
their training
their manager
their desk & chair
hardware
software
rent
electricity
employers NI
employers liability insurance
paper, stamps, ink & printers
costs of storage of paper, stamps, ink & printers
costs or ordering paper, stamps, ink & printers
share of costs of daily royal mail collection
their share of payroll costs
their share of office cleaning costs
their share of kitchen equipment costs
their share of health & safety costs e.g. provision of fire extinguishers
their share of training for fire marshals and first aiders
their share of hygiene provsision e.g. paper towels, loo roll, sanitary disposal
admin costs for processing your payment
fees e.g. visa for your payment
time off for company meetings
time off for fire drills
share of business rates
etc.

This isn't a definitive list and I've probably forgotten some things but hopefully you get the gist of it.

dunstonh

lol lisyloo. You have got to have that copied somewhere ready for pasting

raskazz

I really think that there should be a sticky thread on this topic, as the subject pops up a couple of times a week, every week.

payless

You missed the biggy...

cost of acquiring the business . ( be it broker, affiliate marketing or normal advertising)

Especially on cancellation ... for example I recently cancelled my insurance 6 months into the policy
( wanted to insure a 2nd car.. they offerred me a small discount.. but another provider offered to mirror full NCD on 2nd car as well if I moved both cars to them)

I was charged 1months premium as a cancellation fee ... but they had already paid out equal to 2m via cashback site ... and thats before you take into account the other costs as listed

_Andy_

lisyloo wrote: »

They are entirely legal as they are admin fees.
Sorry to sound harsh but what is crazy is signing up to a contract you don't like and then complaining about it. Did you not read the important points?

Totally agree Lisyloo - I'm getting quite frustrated at the increase in posts about this kind of thing recently - e.g. "X company have dared to charge me X amount even though it was within the terms and conditions I agreed to" or "X company has the audacity to be making profit! Can I claim this back?"
etc etc ad nauseum.

Caz6

Wow – talk about a sensitive topic!
Lisyloo – Thanks for your points, I did read the contract (I read them for a living so know the importance of it) so I was not surprised by the fees but more wanted to question the legality of them in comparison to the bank charges and mortgage exit fees which Martin is promoting the reclaiming of.
Raskazz – Fully agree with you! I looked at the other stickys but nothing was standing out as relevant to my questions
_Andy_ - Bank charges and mortgage exit fees were in the contracts too.
Like the bank charges and mortgage exit fees, I recognise these companies incur a cost and are entitled to charge something for the changes/cancellation but is it proportional to the costs they actually incur? If not they are a breach of the Unfair Contract Terms Act and so, in a contract or not, they are not enforceable – and I didn’t copy that from the bank charges, I understand these things ;o)
Dunstonh, I’ve not forgotten about you, you’ve just answered my question fair n’ square with your views – thanks for that.

lisyloo

recognise these companies incur a cost and are entitled to charge something for the changes/cancellation but is it proportional to the costs they actually incur?

You are absolutely right that just because something is in a contract does not make it legal or enforceable e.g. contract with a hit man to kill someone.

My own view is that £20 is proportional (and £75 is not).
My reasons are the list of costs I've given above.
You are not just paying for 2 minutes of someones time, but their entire cost of employement.
As well as that admin costs are now stripped out of up-front premiums (no doubt to lower initial premiums) so you need to remember you hadn't already paid for this.
It's a bit like having to pay for luggage on Easyjet or RyanAir but they DID actually lower flight costs.
Personally I think this is fairer, because people like me with stable lives don't have to subsidise less stable people (I don't mean mentally stable I mean people who cost the industry money because they change house, car, partner etc.).

I think the view of the FSA would be that £20 is quite reasonable so I honestly don't think you'd get anywhere with this and it's very much at the lower end of the scale.
I think I saw £50 quoted somewhere by dunstonh.
I personally think fees of £75 or more ARE too much and I'd quite like to see it challenged.

As regards bank and mortgage charges, there is a distinct legal difference between punitive fees and "admin" fees to cover costs.