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  • FIRST POST
    • Former MSE Helen
    • By Former MSE Helen 16th Apr 12, 4:31 PM
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    Former MSE Helen
    MSE News: Beware sky-high insurance change fees
    • #1
    • 16th Apr 12, 4:31 PM
    MSE News: Beware sky-high insurance change fees 16th Apr 12 at 4:31 PM
    This is the discussion thread for the following MSE News Story:

    "Consumers should watch out for costly fees when cancelling or adjusting details on car and home insurance policies"

Page 1
  • lhurren
    • #2
    • 16th Apr 12, 5:11 PM
    • #2
    • 16th Apr 12, 5:11 PM
    When I moved house Direct Line charged me ~30 when I phoned to update my car insurance policy. Just as I was about to hang up I remembered that my annual mileage would also change, so I confessed that I'd forgotten to mention it earlier. They wanted another 30 to make the change despite it being the same phone call!!

    After speaking to a couple of managers I eventually got them to waive the second charge, but the fact that they even considered doing it was ridiculous.
    • dunstonh
    • By dunstonh 16th Apr 12, 6:02 PM
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    dunstonh
    • #3
    • 16th Apr 12, 6:02 PM
    • #3
    • 16th Apr 12, 6:02 PM
    If you get nowhere, you can complain to the independent arbitrator, the Ombudsman.
    The FOS publications have them rejecting a complaint as they felt 50 was acceptable. That was over 5 years ago. So, it seems strange that the article is going on about 30 charges and going to the FOS if you dont like it when the FOS themselves published in their monthly complaint examples that they rejected a complaint about 50. (although it does say it expects the cost to reasonable and justified and that the insurer in that case did justify the 50).

    It is a shame that the article doest give even a small mention to why these explicit charges have cropped up more over recent years than in the past. A little bit of consumer education and understanding may be helpful. it would be a shame if insurers had to revert to the old way which would see premiums rise for everyone. Instead of only those creating work paying for the work they create.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • raskazz
    • By raskazz 16th Apr 12, 6:25 PM
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    raskazz
    • #4
    • 16th Apr 12, 6:25 PM
    • #4
    • 16th Apr 12, 6:25 PM
    "Consumers should watch out for costly fees when cancelling or adjusting details on purchasing car and home insurance policies"
    Originally posted by MSE Helen
    It may be slightly pedantic, but wouldn't the above be a more appropriate piece of advice? Consumers should be checking administration fees at the point of quote/inception, not after the event.
    • atarisrocks
    • By atarisrocks 16th Apr 12, 6:33 PM
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    atarisrocks
    • #5
    • 16th Apr 12, 6:33 PM
    • #5
    • 16th Apr 12, 6:33 PM
    hastings charged my bf 85 + 3 days worth of insurance to cancel a policy he did not have with them as they renewed it even after he phoned, emailed and sent a letter to say he wishes to cancel at the end of his insurance.
    • stugib
    • By stugib 16th Apr 12, 6:54 PM
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    stugib
    • #6
    • 16th Apr 12, 6:54 PM
    • #6
    • 16th Apr 12, 6:54 PM
    Dan Plant, MoneySavingExpert.com money analyst, says: "This is yet another example of financial companies walloping us with ludicrously disproportionate charges, punishing consumers for simply living normal lives. Slapping a 30 charge on you for a few button pushes, or 65 for daring not to need the policy any longer is outrageous
    Not an insurance industry analyst then...
    • rs65
    • By rs65 16th Apr 12, 7:00 PM
    • 5,358 Posts
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    rs65
    • #7
    • 16th Apr 12, 7:00 PM
    • #7
    • 16th Apr 12, 7:00 PM
    It receives around 50 complaints each month from consumers about these admin fees.
    It would be useful to know how many were successful.
    • dunstonh
    • By dunstonh 16th Apr 12, 7:14 PM
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    dunstonh
    • #8
    • 16th Apr 12, 7:14 PM
    • #8
    • 16th Apr 12, 7:14 PM
    It would be useful to know how many were successful.
    Originally posted by rs65
    Yes as the one example they have published doesnt reflect that sort of volume. I wonder if they are grouping in premium adjustment complaints in with those as well. A frequent error we see on this forum is people mixing up increased premiums due to new risks as being an amendment charge. Plus, the [relatively] pro-rata refund that often turns into an extra payment for those paying monthly.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • weejonnie
    • #9
    • 16th Apr 12, 8:05 PM
    • #9
    • 16th Apr 12, 8:05 PM
    At the moment insurance intermediaries make most of their income through commission on the policies sold. It will be interesting to see consumer reaction if, like financial advice, intermediaries are forced to charge fees for their services.

    The difference of course is that insurance is perceived as a 'distress product' whereas financial advice isn't.
    • Taiko
    • By Taiko 16th Apr 12, 8:13 PM
    • 2,552 Posts
    • 2,391 Thanks
    Taiko
    Hasting Direct wanted a similar amount as an admin fee when I moved, plus the increased premium. Expected the slight increase in premium, but got the admin fees removed.

    To do this, I used The Data Protection Act. If a company holds incorrect information on you, they are obliged to amend it. Schedule 1(1)(4) of the DPA lists the requirement for personal data to be kept up to date. If they'd been notified and refused, I successfully argued they'd be in breach of the DPA.

    Could be something to use. Or may have just agreed with me as a means of ending the call.
  • Arg
    The FOS publications have them rejecting a complaint as they felt 50 was acceptable. That was over 5 years ago. So, it seems strange that the article is going on about 30 charges and going to the FOS if you dont like it when the FOS themselves published in their monthly complaint examples that they rejected a complaint about 50. (although it does say it expects the cost to reasonable and justified and that the insurer in that case did justify the 50).

    It is a shame that the article doest give even a small mention to why these explicit charges have cropped up more over recent years than in the past. A little bit of consumer education and understanding may be helpful. it would be a shame if insurers had to revert to the old way which would see premiums rise for everyone. Instead of only those creating work paying for the work they create.
    Originally posted by dunstonh
    Or they could just stop using it as an excuse to rip people off.
    • dunstonh
    • By dunstonh 16th Apr 12, 10:00 PM
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    dunstonh
    Or they could just stop using it as an excuse to rip people off.
    Originally posted by Arg
    Premiums for most people are still very low in historic real terms. So, how are they ripping people off?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • weejonnie
    Premiums for most people are still very low in historic real terms. So, how are they ripping people off?
    Originally posted by dunstonh
    No - the rip off isn't the insurance premiums - it is the costs that are imposed for administering the policy i.e. making an MTA or cancelling it.

    We are rapidly entering a phase where the basic insurance will cost very little, but the companies will charge a lot where they can for administering it (Just remember that when you buy a policy you are pretty well stuck with it for a year (especially if there are high cancellation fees!) and hence at the tender mercy of the insurer/ broker for that period.)

    Admiral is quoted as being very expensive - and by chance they are one company that makes a profit on motor insurance - 90% insurers are making a loss.
    • wozearly
    • By wozearly 16th Apr 12, 10:49 PM
    • 202 Posts
    • 210 Thanks
    wozearly
    Expected the slight increase in premium, but got the admin fees removed.

    To do this, I used The Data Protection Act. If a company holds incorrect information on you, they are obliged to amend it. Schedule 1(1)(4) of the DPA lists the requirement for personal data to be kept up to date. If they'd been notified and refused, I successfully argued they'd be in breach of the DPA.

    Could be something to use. Or may have just agreed with me as a means of ending the call.
    Originally posted by Taiko
    The individual agent on the phone may have agreed to get you off the line, or had got cold feet with the thought of doing something you were assuring them was illegal.

    As a wider suggestion, its actually has legs as a method of challenging the fees outside, or in combination, with FOS. The Information Commissioner's Office (ICO) website has the following:

    Q. Does personal data always have to be up to date?

    A. This depends on what the information is used for. If the information is used for a purpose that relies on it remaining current, it should be kept up to date.

    (comment) It would be very hard for an insurer to argue that they didn't need to keep your personal information up to date, such as your address, mileage, etc. as these are used to price the policy and contact you with documentation. This wouldn't apply for different prices as a result of the change. It also wouldn't apply to cancellation charges, assuming that these are stated in the T&Cs of the policy that you signed up to, as cancelling the policy doesn't involve amending your personal information.

    My gut feeling is that companies may then find it tricky to justify admin charges at current levels as being proportionate to the cost involved in making the change.

    Q. What happens when individuals challenge the accuracy of information held about them?

    If this happens, you should consider whether the information is accurate and, if it is not, you should delete or correct it. Sometimes the individual may be able to provide convincing documentary evidence that, for example, a date of birth has been recorded incorrectly.

    If an individual is not satisfied that you have taken appropriate action to keep their personal data accurate, they may apply to the court for an order that you rectify, block, erase or destroy the inaccurate information.

    (comment) Intuitively, the ICO would take a dim view of companies charging the customer in order for them to process updates to personal information that a) the company requires the customer to keep up to date by informing them of any changes, b) is personal data as defined by the DPA and the customer therefore has a legal right to ask to be corrected.

    If the company refuses to update the information because you won't pay the admin fee, then they put themselves in clear risk of a DPA breach by not taking sufficient steps to keep the information accurate.

    If you were to ask a court to force them to update your address to the correct one after having asked them yourself, it would be a relatively easy to prove where you live and hard to see how the company could successfully argue with you that customers need to have a charge levied on them in order for the company to meet its legal obligations under the DPA.

    It is a shame that the article doest give even a small mention to why these explicit charges have cropped up more over recent years than in the past.
    Originally posted by dunstonh
    Whilst I see your point, there are other ways for insurers to flag and deal with problems as opposed to applying blanket levies on all customers updating information that the insurer is legally obliged to keep accurate when the customer informs them of a change, and can evidence it if required.
    • thelawnet
    • By thelawnet 16th Apr 12, 11:05 PM
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    thelawnet
    I don't see a problem tbh.

    People change their policy, they get charged for that, the amount charged might be higher than the cost of the service but at the same time it all gets priced in and overall the total cost to the population at a whole is the same.

    If it was 30/month, or 30/day as with bank fees, I might be concerned, but I really can't get upset about a one-off 30 fee. As for 65 to cancel a policy, how much would you get charged to cancel a gym membership, your BT phone bill, your mobile phone contract, etc? In many cases far more than that, it can run into hundreds.
    • thelawnet
    • By thelawnet 16th Apr 12, 11:06 PM
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    thelawnet
    BTW, it would be helpful to point out that you have a statutory cooling off period where you can cancel for little or nothing.
    • TSx
    • By TSx 16th Apr 12, 11:53 PM
    • 780 Posts
    • 548 Thanks
    TSx
    BTW, it would be helpful to point out that you have a statutory cooling off period where you can cancel for little or nothing.
    Originally posted by thelawnet
    Not always, many insurers charge a cancellation fee which can be quite pricey even if you cancel it before the policy starts.
    • JimmyTheWig
    • By JimmyTheWig 17th Apr 12, 8:31 AM
    • 11,848 Posts
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    JimmyTheWig
    Also worth noting that the Admiral group always tend to be significantly cheaper for car insurance (for me, at least).

    Changed cars at the weekend. 6 months left on the policy. Been with them for a few years (they've matched my best quote [with their sister companies] at renewal).
    Cost about the same to cancel the existing policy and take out a new one than to change the existing policy. Obviously with the first option I get 12 months insurance, with the second I get 6.
    Customer services agreed to waive the cancellation fee, but it still would have been better value to pay it and take the new policy.
  • acrleyton
    Some insurers charge a fee, some don't. It's just like Ryanair charging for baggage and BA not.

    If the insurer hasn't been upfront about any fees at policy inception then I'd say there's an issue. But if they have, then factor in the cost of maybe one or two changes when you're comparing prices.

    Are the charges disproportionate? Maybe. But I don't think it's fair to say insurers are "ripping us off" just because some hide the admin charges in their actual premiums.
    • Lifes Grand Plan
    • By Lifes Grand Plan 17th Apr 12, 9:41 AM
    • 1,038 Posts
    • 992 Thanks
    Lifes Grand Plan
    The worst thing about these fees is not how much they charge (although that is bad)... but the fact that they are dishonest about them, i.e. they hide them.

    I.e. if you ring up and say you have a new car and you want to change the insurance policy, they say "ok, we can do that. It will cost you 100" (for example...

    What they are hiding though is that the difference in changing from car A to car B is only 60 and the other 40 is their admin fee.... They don't tell you that though and people just assume that the full 100 was because the car is more expensive to insure.
    A big believer in karma, you get what you give

    If you find my posts useful, "pay it forward" and help someone else out, that's how places like MSE can be so successful.
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