Insurers 'taking policyholders for a ride' over hidden fees - Which?

Home and car insurers are charging policyholders “exorbitant hidden fees” for basic policy changes and renewals, according to a Which? investigation.

The consumer group reviewed the terms and conditions on the websites of 39 car, and 34 home insurers.

It highlighted examples of costly policy amendments, including:

• AXA and Swiftcover charge a flat fee of £30 to update address details, change surname on marriage or change vehicle
• Hastings charges £35 to amend details on its car insurance policy.

Which? said some insurance companies also charge people a fee for renewing their policies. 50plus Insurance Services and Hastings charge a renewal fee of £10 and £5 respectively, and both also charge a £10 setup fee. Budget Insurance charges £75 to cancel a car insurance policy.

The watchdog also found that a number of insurers charge what it considered “excessive amounts” of interest to people who want to pay in instalments rather than paying for their cover upfront.

Budget Insurance, AXA and Swiftcover all charge between 29.3% and 32.3% interest depending on the policy. Age UK and First Direct charge nothing extra for their monthly payment options.

It lambasted insurers who don’t publish details of their charges on their website. This made it “near impossible for prospective customers to make an informed choice or compare like for like,” Which? argued .

@InsTimesNews dual pricing is not helping the perception of insurers integrity with consumers #insurance

— Jon Newall (@insurance_jon) April 16, 2012

Which? chief executive Peter Vicary-Smith said: “It’s a disgrace that insurers charge exorbitant fees to make basic changes to a policy. These charges should reflect the real cost to the company and not a way of making easy money from consumers who are already struggling with high and rising insurance premiums.

“We want insurance companies to be clearer about the fees that they charge and stop hiding the details away in pages of terms and conditions. The new regulator, the Financial Conduct Authority, must ensure that any charges reflect the actual cost incurred by the insurance provider.”

Insurers respond

A Swiftcover spokesman told the BBC: “When it comes to swiftcover.com and ‘hidden charges’, as Which? puts it, they have simply got it wrong.

“Swiftcover.com has always been an online-only insurer, allowing customers to change their policy online whenever they wish, and as often as they need to - without charge.

“If, however, a policyholder chooses to update their policy by speaking to the help desk, there is an admin charge of £30, like with many other insurers.”

An AXA spokesman added: “Both Axa Direct’s and Swiftcover’s home and motor policies are sold 100% online, and if your circumstances change (for example, you move house or need to add a second driver), you can update your details online and at a time that suits you, at no charge.”