Software provider admits it got charging scale wrong
Software provider Sirius is to nearly double its transaction charges after admitting the company had "moved into an unprofitable business line".
Though insurers such as Norwich Union, Fortis and Allianz Cornhill, which opted out of transaction charges, will not be affected, a number of other insurers will see costs rise from around £1.20 to £2 per transaction.
The notification letter to insurers reads: "As a result of our review, we have identified that this has moved us into an unprofitable business line. We have, therefore, identified the need to increase our EDI transaction charges to £2 per transaction from 1 April 2004 for all business transacted."
The announcement comes just weeks after Sirius negotiated its service agreements with its business partners and two months after it announced profits for 2003 would be lower than expected.
An insurance insider said: "We are supposed to be in a partnership with Sirius. Sending out this kind of memo does not help. We are uncomfortable about it and unless Sirius can demonstrate added value to justify the increase, we will have to sit down to negotiate any change."
The hike comes at a time when the trend is to lower transaction charges, something Sirius claims it is also keen to do.
Sirius UK systems chief executive Mike Dodd said: "We offered all our insurer partners the chance to opt out of transaction charges a couple of years ago. Those that did will see no change."