The latest issue of COVER included a report that some members of the protection provider community, including the ABI, were unhappy with the way third party agencies rate products.
Among the complaints were that scores given were often not weighted sufficiently and had led in part to the conditions war in critical illness (CI) that dominated much of the last few years.
It was also suggested that advisers relied too heavily on these ratings and falling down the comparison tables would reduce the chances of intermediaries seriously considering a product.
As part of that piece, Owain Thomas spoke to Ben Heffer, insight analyst at Defaqto, the one rating agency explicitly named by the insurers.
Heffer was not present at the conference so did not wish to comment directly on what was said, but he did recognise that perhaps the sentiments expressed reflected a need for Defaqto to better educate the industry as to how the ratings are achieved and what they mean.
And perhaps most importantly, he addressed how advisers should be utilising them when considering clients' needs.
Using CI as an example throughout, Heffer began by explaining the initial criteria used to calculate its ratings and how the scores are achieved.
"From our database we establish the criteria that are relevant for consumers and these broadly fall into three groups," he said.
"First is the product itself, namely the conditions offered. Second is the flexibility within the product, such as the ability to stop and start paying premiums and guaranteed insurability options (GIOs) because we think they're quite important for consumers.
"Thirdly we consider the proposition, which might be provider specific including health and wellbeing services, claims helplines and the underwriting methods used."
Those features are scored on a five point basis and then aggregated to give an overall score for each product.
A common sense approach
At this point, all the products in that particular market are tabulated with the top 10% typically being given a five star score, although, as Heffer continued, it is critiqued.
"We do apply a sense check because sometimes there's an obvious break in the data which lends itself to it.
"We also have criteria in which providers have to do well in to achieve five stars, so even if they have a really good aggregate score but didn't do well in the core criteria they can't achieve five stars.
"This way we make sure a product doesn't get five stars by having lots of silly things which don't add up to much, but are actually scoring by having the core things," he added.
A major gripe laid at Defaqto's door was that of encouraging insurers to make products more complex by increasing the conditions covered and not weighting the most important ones.
Heffer acknowledged this used to be the case, but noted the system was changed a couple of years ago to reflect these concerns.
"We have moved away from scoring simply the number of conditions to the value of the definitions, but it was never the case that others got twice as much as cancer.
"They used to get the same, which was a bit silly, but we've employed a weighting.
"Now it's only the illnesses which count for a significant number of claims that can score five points and most others are lumped together and aggregated so they can only contribute to a single five point score," he said.
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COVER Podcast #10