Cancellation and adjustment fees rose well above the rate of inflation, according to aggregator
Insurance policy admin fees have risen sharply since 2012, according to research from aggregator GoCompare.
It said that cancellation fees had doubled in that time, while charges for mid-term policy changes have gone up by 38%.
GoCompare compared like-for-like data from June 2012 and June 2019, which it said showed inflation-busting fee hikes.
To make a material change mid-policy, motor customers could now be charged up to £70.50, it said, compared with a £50 maximum seven years ago. This is on top of any increase in premium that could be levied on the policy.
It added that 73% of insurers were charging such ‘adjustment’ fees.
The average cancellation fee had also gone up considerably in the same time period, from £40.95 in 2012 to £60.85 today. These fees range from £7.50 to £300, it said.
The report comes as the FCA nears the completion of its investigation into pricing practices among major insurers and intermediaries, with a particular focus on dual pricing, as well as additional fees.
Set-up fees also saw a dramatic rise (82%) for the same period, although these are not commonly applied, it said.
Commenting, GoCompare founder and chief executive Lee Griffin said: “The car insurance market is highly competitive, so rather than incorporating the costs of certain admin tasks into the basic premium, some insurers make other charges.
“This helps keep premiums down by ensuring that only the policyholders who change or cancel their policy, for example, pay for the additional work required to administer their policy.”
Responding to the findings, the ABI told Insurance Times: “Motor insurance in the UK is very competitive, and our latest motor premium tracker showed average premiums at their lowest level for two years.
“All insurers follow regulations from the Financial Conduct Authority, that any fees they charge must be clearly and fully set out. This includes administration and cancellation fees. For a number of insurers there is no charge to change a motor policy if it’s done online.
“It’s always a good idea to shop around to ensure you get the right deal for your needs at the best price.”
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