The Fee Conversation
Insurance fees arrive at moments of friction. The customer cancels mid-term, adjusts cover after a house move, claims, or accepts the monthly payment plan — and meets a charge they did not price into the decision. The premium finance market study found 48% of motor and home policies are bought on instalments, costing typically 8-11% more than annual payment, with almost 20% of customers paying APRs above 30%. ICOBS disclosure is mostly being met. Comprehension at the point of the charge is not. Disclosure compliance and a fee conversation are not the same thing.
The structural move is to design every fee touchpoint as a moment where charge, reason, and customer-relevant alternative coincide — not a back-office transaction the customer reconstructs from a statement afterwards. The discipline applies to premium finance setup, mid-term adjustments, cancellation, and renewal price changes:
Pounds at the point of choiceEvery fee with material impact is expressed in pounds at the moment the customer can act on the information — the basket, the renewal letter, the mid-term adjustment screen, the cancellation call. The cost of monthly versus annual is shown in pounds and pence for the customer's actual premium, not a percentage range. Cancellation fees, admin fees, and mid-term-adjustment charges are visible before the choice they inform, not after. The design test: can the customer at the moment of the decision name the fee, in pounds, and identify the alternative the fee would have avoided?
Justification the customer can recogniseEach fee has a stated reason that connects to a service or risk the customer can identify. Premium finance interest reflects funding cost; an admin fee reflects the work of processing a change; a cancellation fee reflects a defined service or risk component. Where the fee cannot be justified to the customer in those terms, the framework treats that as a fair value question, not a disclosure question. The FCA's 'double dipping' concern — a higher underlying premium for monthly-paying customers without objective basis — is the worked example of a fee with no recognisable justification. The design test: would a reasonable customer accept the stated reason for the fee, and would the regulator accept that reason on the firm's documented evidence?
An alternative the customer can takeWhere a fee can be avoided or reduced — paying annually rather than monthly, switching to a different product within the firm, accepting a longer notice period — the alternative is presented at the same moment as the fee, with comparable specificity. Auto-renewal opt-out under PS21/11 and the new premium-finance disclosure standards both turn on the customer being able to choose a different course at the moment of charge. A fee disclosed without a navigable alternative is not a conversation; it is a notification. The design test: where the customer could have chosen differently, does the journey present the alternative at the same moment, with the same prominence, as the fee?
Premium finance journeys present the cost of monthly versus annual payment as a pounds-and-pence figure for the customer's actual policy, at the point of payment selection, and the same figure recurs in confirmation, portal, and renewal communications.
Cancellation, mid-term adjustment, and renewal price-change journeys disclose any applicable fee at the moment the customer can choose a different course, not at the moment the charge is taken — with a navigable alternative presented at the same prominence as the fee.
Where the underlying premium differs between annual-paying and monthly-paying cohorts, the firm has a documented objective basis (claims experience, cancellation rate, default risk) and that basis is evidenced in the fair value assessment for premium finance — the FCA's double-dipping concern is closed at firm level.
Complaint volumes related to fee surprise (cancellation fees, mid-term fees, renewal price changes, premium-finance APR) are tracked as a price-and-value indicator, with reduction targets tied to specific journey changes rather than communications campaigns.
A motor insurer redesigned its premium-finance setup journey after the FCA's premium finance update paper. The previous flow had presented APR, total cost of credit, and total amount payable as separate figures, often on different screens, with the headline price (annual premium) and the monthly figure shown most prominently. The redesigned flow puts a single comparison at the moment of payment selection: 'Paying annually costs £400. Paying monthly costs £441 — that is £41 extra over the year, an APR of 25%. You can change this choice at any point in the next 14 days.' The same comparison appears in the email confirmation, the customer portal, and the renewal letter, with the figures recalculated for the current policy. A second change followed the FCA's double-dipping concern: where the underlying premium for the monthly cohort had previously included an unstated risk loading, the firm separated the loading into a named line item with its own evidenced rationale, or removed it where the rationale could not be defended. The cancellation rate within the 14-day window rose; complaints about premium-finance cost fell.
A home insurer reviewed its mid-term-adjustment journey after a cluster of complaints about administration fees following house moves. The previous design charged a £25 admin fee for any change, disclosed in the policy schedule at inception, applied automatically when the change was made. The redesigned flow shows the fee at the point the customer initiates the change, in the same screen as the new premium calculation: 'This change adjusts your premium by £X and includes a £25 administration fee. You can complete the change online for £25 or by phone for £25; the fee is the same.' Where the change is being made because of a vulnerability event (bereavement, financial difficulty), the journey routes to a colleague who can waive the fee under a documented policy, and the policy itself is published in the customer portal. The fee did not disappear. The customer encountered it at the moment they could still choose not to make the change, and with a stated route to fee waiver where the firm's vulnerability framework applied.
- Common failure modes
The most common failure mode is the policy-schedule defence: the fee was listed in the document the customer agreed to, therefore it was disclosed. The Consumer Duty's consumer understanding outcome rejects that frame; PS21/11's renewal-disclosure logic and ICOBS premium-finance rules anchor the same point. A second is the percentage-only move: presenting an APR or an admin-fee percentage without translating to pounds for the customer's actual policy. The premium finance study showed customers comparing well when figures are expressed in pounds and badly when expressed as APRs. A third is the late-stage reveal: showing the cancellation fee on the cancellation screen rather than at point of sale, where the customer could have chosen a different product. A fourth is bundling that obscures: where premium finance, admin fee, and policy uplift for the monthly-payment cohort are presented as a single combined cost without each component being visible — the FCA flagged 'double dipping' (a higher underlying premium for monthly-paying customers without an objective basis) as a specific concern. A fifth is treating the call recording as evidence of comprehension: a script read at speed at the point of sale, with no testing of whether the customer registered the fee or could repeat its amount, is ICOBS-compliant theatre. The fee conversation is judged by whether the customer can make a decision against the fee, not whether the firm can produce a transcript of having stated it.