Huge surge in car insurance administration charges

By Charlotte Whyatt - Tue 27th Aug 2019
Huge surge in car insurance administration charges

Motorists have experienced a huge surge in car insurance administration fees since 2012, new research has shown.

According to data obtained by comparison site GoCompare, cancellation fees have risen by 49% while the cost of making amendments to an existing policy has increased by 38%.

They found that providers were charging an average of £40.95 to cancel a policy mid-way through in 2012, a figure which seven years later has jumped to £60.95.

Likewise, customers were required to pay an average of just £20.51 to change the address on their policy or add a new driver to it in 2012 and now £28.25 to do the same in 2019.

While not enforced by every provider in the UK, set-up fees have also increased by a huge 82%.

It’s not all bad news however, as the fee to receive duplicate documents has fallen by 25%. This is most likely down to the widespread use of digital documents.

Lee Griffin, founder and chief executive of GoCompare, explained that there's actually a good reason as to why these charges are in place.

“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,” he said.

"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."

Source: This is Money