Insurance deposit before renewal
Discussion
My insurance is due for renewal early December, I pay monthly by dd. got a letter from my current insurer advising that they will be taking a deposit for next years insurance at the start of November unless I tell them otherwise.
If they take the dd and I don't renew with them, they will refund. So they have the pleasure of my money in their account for over a month.
Is this a new thing insurance companies are doing or is it just this particular company?
If they take the dd and I don't renew with them, they will refund. So they have the pleasure of my money in their account for over a month.
Is this a new thing insurance companies are doing or is it just this particular company?
ooo000ooo said:
My insurance is due for renewal early December, I pay monthly by dd. got a letter from my current insurer advising that they will be taking a deposit for next years insurance at the start of November unless I tell them otherwise.
If they take the dd and I don't renew with them, they will refund. So they have the pleasure of my money in their account for over a month.
Is this a new thing insurance companies are doing or is it just this particular company?
Never heard of this before.If they take the dd and I don't renew with them, they will refund. So they have the pleasure of my money in their account for over a month.
Is this a new thing insurance companies are doing or is it just this particular company?
Asides from it being a dubious policy what's the financial gain or them at your detriment? Let's say were talking £100 at 2%pa for 1 month its only a gain from its only 17p benefit to them/detriment to you. Not really worth worrying about but the policy does suck and on the principle alone do something about it.
Pommygranite said:
Asides from it being a dubious policy what's the financial gain or them at your detriment? Let's say were talking £100 at 2%pa for 1 month its only a gain from its only 17p benefit to them/detriment to you. Not really worth worrying about but the policy does suck and on the principle alone do something about it.
Not even that, I'd expect it to be nearer 0.1-0.2%.Although as others have said, I'm a bit surprised they need a deposit on a renewal anyway.
I think the OP may be getting confused between a deposit and a monthly direct debit.
I get a renewal letter a month before my insurance is due for renewal; mine should be arriving around the second week of November, if you don't call to cancel it or to change any details or the level of cover then they will just carry on taking the monthly direct debit or the whole premium, depending on how it's paid for, using the assumption that you want to carry on being insured with them based on the renewal details.
It's common practice.
I get a renewal letter a month before my insurance is due for renewal; mine should be arriving around the second week of November, if you don't call to cancel it or to change any details or the level of cover then they will just carry on taking the monthly direct debit or the whole premium, depending on how it's paid for, using the assumption that you want to carry on being insured with them based on the renewal details.
It's common practice.
HTP99 said:
I think the OP may be getting confused between a deposit and a monthly direct debit.
I get a renewal letter a month before my insurance is due for renewal; mine should be arriving around the second week of November, if you don't call to cancel it or to change any details or the level of cover then they will just carry on taking the monthly direct debit or the whole premium, depending on how it's paid for, using the assumption that you want to carry on being insured with them based on the renewal details.
It's common practice.
The letter reads as followsI get a renewal letter a month before my insurance is due for renewal; mine should be arriving around the second week of November, if you don't call to cancel it or to change any details or the level of cover then they will just carry on taking the monthly direct debit or the whole premium, depending on how it's paid for, using the assumption that you want to carry on being insured with them based on the renewal details.
It's common practice.
"As part of the renewal process we require a deposit, which is used towards your premium for next year. This is not a quote, we will be in touch in the coming weeks to confirm your policy price.
If you are happy for us to proceed with this then you don't need to do anything. This payment of £x.xx will be collected from your account on 4th November 2013. Please be aware this deposit is based on your premium for last year and is not your renewal price.
Blah blah blah, if you choose not to renew with us, then we will refund the £x.xx provided there is no outstanding balance"
In 25+ years of paying my insurance monthly I've never had this.
ooo000ooo said:
HTP99 said:
I think the OP may be getting confused between a deposit and a monthly direct debit.
I get a renewal letter a month before my insurance is due for renewal; mine should be arriving around the second week of November, if you don't call to cancel it or to change any details or the level of cover then they will just carry on taking the monthly direct debit or the whole premium, depending on how it's paid for, using the assumption that you want to carry on being insured with them based on the renewal details.
It's common practice.
The letter reads as followsI get a renewal letter a month before my insurance is due for renewal; mine should be arriving around the second week of November, if you don't call to cancel it or to change any details or the level of cover then they will just carry on taking the monthly direct debit or the whole premium, depending on how it's paid for, using the assumption that you want to carry on being insured with them based on the renewal details.
It's common practice.
"As part of the renewal process we require a deposit, which is used towards your premium for next year. This is not a quote, we will be in touch in the coming weeks to confirm your policy price.
If you are happy for us to proceed with this then you don't need to do anything. This payment of £x.xx will be collected from your account on 4th November 2013. Please be aware this deposit is based on your premium for last year and is not your renewal price.
Blah blah blah, if you choose not to renew with us, then we will refund the £x.xx provided there is no outstanding balance"
In 25+ years of paying my insurance monthly I've never had this.
HTP99 said:
Mmm, weird, never seen or heard anything like that before, perhaps it's a sly way of getting you to agree to continue with them before you know what your new premium and/or monthly payment is; they take the "deposit" for the forthcoming year, the renewal price appears a few weeks later, it's a little higher than last year, you've already paid the first instalment or two in the deposit you then can't be arsed to cancel it and go through the rigmarole of getting the deposit back and looking for other quotes so you just let it run?
Be interesting to see if, when the renewal appears, they used the deposit to make the renewal look lower than it actually is?I.e your renewal is £350 less 35 quid already paid (in small print) giving a total of £315 to pay, hoping that people will skim over the figures and just see the bottom line?
ooo000ooo said:
What does it say? I don't fancy registering just to read one article.Fastdruid said:
What does it say? I don't fancy registering just to read one article.
Wierd, if you google you can read it but the link requires registration.Anyhow -
The high street broker requires a deposit as part of the renewal process which goes towards the following year's premium.
However, RWA Compliance Services has queried this practice from a treating customers fairly (TCF) and client money perspective.
Indeed, Swinton's renewal deposit process also came under the spotlight when it was highlighted by the BBC last year.
Last month Swinton was fined £7.4m by the Financial Conduct Authority for mis-selling in terms of the aggressive sales strategy it employed for the sale of monthly add-on insurance policies.
Post-sale barrier
As for this scheme, Terence Clark, RWA compliance director, told Insurance Age that Swinton is the only broker he is aware of that operated such a process.
"This is not a renewal invitation, so the client is not receiving any advice or information regarding the suitability of any insurance policy, so it would not appear to fall within the definition of insurance mediation," he stated.
As for TCF, he questioned whether taking a deposit would act as an "unreasonable" post-sale barrier for clients to change product and if customers had been notified in good time about the need to pay the deposit.
Furthermore, Clark also questioned where the deposit money was being stored by the broker. He cautioned whether it should be stored as client money as "no insurance mediation has been undertaken" in light of asking for the deposit.
Question
He continued: "[If] it is in a client money account, which if it is not client money, it should not be, as it contaminates the client money pool and the trust, is it in some form of segregated trust account for the benefit of clients, or does it just form part of Swinton's overall assets within their account?
"Either way, it can produce an income stream for a broker if interest bearing accounts are utilised and this brings a question, has the client been made aware of this and has consent been obtained as necessary?"
In addition, another compliance expert, who declined to be named, argued that the deposit scheme was a "little different" from the concept of a continuous direct debit to renew and existing policy which an insurer could argue was "reasonable practice".
The source explained: "In this instance a broker is collecting a deposit against they know not what - they have no idea with whom any future insurance contract might be completed.
"So what is the status of that money, where is it lodged and on what basis are they collecting it?"
Convenient
However, in a statement issued by Swinton to Insurance Age, the broker maintained: "Along with many brokers and insurers, Swinton operates a pre-renewal deposit and direct debit facility.
"It is designed to be convenient for our customers, and helps us manage a huge number of transactions each year.
Swinton continued: "The option of pre-renewal deposit is discussed at the point of sale. For customers who choose to pay by direct debit, Swinton sends a letter reminding them of the impending collection.
"This letter gives clear instructions on how not to proceed with payment if that is their choice, in which case they have their deposit returned."
Full refund
Meanwhile, Graeme Trudgill, British Insurance Brokers' Association executive director, stated that Swinton gives clients 55 days' notice ahead of when a renewal deposit payment is to be taken for clients who pay by direct debit.
He said: "We understand payment is taken no more than seven days prior to the renewal date and Swinton have a no quibble money back guarantee if the client does not want to renew.
"Also if the client has evidence of a replacement insurance policy after the renewal date, then Swinton will give a full refund."
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