Car Insurance FAQs

Why Are MTA/Change Policy Details Fees So Very High?

I want to change the details of my policy and the insurer is asking £25 this seems very expensive.
MTAs, Mid Term Adjustments, Change Of Details, Alter My Policy whatever term you use being charged to alter a policy is a constant source of annoyance, what is less clear is is this annoyance reasonable?

It is very clear that a large percentage of the population wants the cheapest insurance possible, nothing wrong with that but it also seems reasonable that removing the cost of changing policy details from the premium is also reasonable as most policy holders don't make changes mid term.

So if we accept that it is reasonable to be charged for MTAs how much should we be charged? Should it be just the cost of actually making the change or the cost plus a reasonable profit.

I think that the answer is clearly that the insurer should be allowed to make a reasonable profit, he is offering a service and the policy holder is the one asking to change the agreement.

It is certainly possible to offer Free MTAs and average out the costs and spread them across all policy holders, it is mainly a marketing and operational decision which way an insurer goes.

So what does it costs to do an MTA?

Process Cost Running Total
Operator to take the call and process the documents, assume 10 minutes @£20/hour.

This is based on hourly rate of £10 * 2 to cover holidays, office space and equipment and management, recruitment and training of the employee.
£3.33 £3.33
Print and mail documents £1.50 £5.83
Software Development To Support MTAs, let's be very conservative and put the intial cost at £30k.

Although this is mostly a one off cost there will be some ongoing costs to cover change of processes by the company and schemes regarding what is acceptable for a temporary change of drivers or vehicles.
£1.00 £6.83
Cost of collecting additional premium, there will be banking or card processing fees for the additional premium. I have gone with an almost pluck out of the air number of 75p £0.75 £8.58

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