Can insurance companies charge administration costs every year on their premiums is this legal?

It is not illegal to charge maintenance fees so long as the fees are disclosed and not hidden. If you stop and think about it. If the fees are not charged then those maintenance cost will instead have to be factored into the premium causing it to be higher. Most company maintenance fees are on a graduated scale and not based on premium. A high maintenance client with more policy forms and more frequent endorsements and policy changes may have the same premium as you but he needs 10 times the maintenance. It wouldn't really be fair to pass his cost off to other insureds premiums who may not need the same level of maintenance service. Almost all Insurance policies are issued with a base policy fee of some sort. The fee varies by the insurer and regulations of your jurisdiction. All policies have certain state mandated fees that will be determined by the regulations of the state in which the policy was issued. These regulatory fees can not be adjusted or waived by the insurer. Some companies and agents also have various maintenance and servicing fees. Almost all Risk Managers have maintenance fees. Believe me Risk Managers earn their fees. Risk Managers may often have higher fees than Agents or companies due to the high maintenance nature of the policy services rendered. A risk manager may have clients with fluid constantly changing risks on multiple policies that need dozens or even hundreds of coverage changes in a single policy term. A risk manager provides much more in depth services, advice, consultations and have to take in more considerations than the typical agent They operate in more of a brokerage style environment and they can often find huge premium and cost savings for their clients. Whether or not a fee is acceptable is entirely up to the consumer. The best thing to do is to look at your policy and service as a whole and determine if the protection and services are are worth what you pay. If not, one can always look to another insurer. Here is an example. One consumer had a $320,000.00 homeowners HOB Policy with No Maintenance Fees issued by a popular A rated brand name insurer at a premium rate of $3,400 dollars per year. The policy was replaced by a not so well known admitted competing carrier also A rated, HOB Policy with same coverages for $1,300 dollars per year. The Agency Sampled 7 different markets to find the best rate for the same coverage and charged a $150 annual service fee. The consumer saved $1950.00 a year on their overall rate. Another example, After Hurricane Katrina many Gulf Coast Homeowners could not find insurance at all, at any price. All Major Insurers had implemented Moratoriums on new applicants. Many Independent Agents and Risk Managers worked very hard to place and replace coverage seeking out other markets domestic and foreign to provide coverage or temporary coverage for their clients.