I used to work for a broker until a couple of weeks ago. When we did motor policies we would provide instalments under a separate finance company which is a loan as opposed to a direct debit to the company.

The insurance company bills the broker for full premium, the finance company gives the broker the premium. The broker gives the premium to the insurance company (less their commission) then the insured pays the finance company back.

Obviously you need to sign an agreement and you should read the small print however, I completely disagree with what they are doing on this one.

Where I worked it was slightly fairer. If someone sold their car for example they would cancel the policy. We would cancel the agreement and the insurance. We would then obtain both the clawback from the finance company and the return premium from the insurance company.

If the clawback was more than the return we would invoice the insured for the additional amount but this is on monthly basis and would never be much money and is one off payment. If the return from the insurers was more than the clawback we would keep the extra money and call it quits

I think with a broker their is no excuse for not explaining small print when selling the policy, that is one of the reasons people use brokers because they are intemediatries and impartial to client or insurer. The Financial Sevices Authority should be doing more to help initiate this but sadly they are another government front of goodwill, whose sole purpose is really to make a shitload of money.

There are only two ways to learn:

1. Get screwed over
2. Work in Insurance

Neither are painless