2016 Star Ratings General Insurance Add-Ons Discussion paper

Transcription

1 2016 Star Ratings General Insurance Add-Ons Discussion paper Defaqto Limited All rights reserved. No parts of this publication may be reproduced in any form by any means, whether electronic, mechanical, optical or any other, or be stored in a retrieval system without the express written permission of the publisher. The publisher has taken all reasonable measures to ensure the accuracy of the information and Ratings in this document and cannot accept responsibility or liability for errors in or omission from any information given and for any consequences arising.

2 About this document This document outlines the key developments and trends that will inform the criteria we use for the 2016 Star Ratings for 'Add-On' products sold alongside Car and Home Insurance. 2

3 Key developments and trends The market In recent years the growth of the aggregator market has led many insurers to change the way in which they construct personal insurance covers, particularly in the motor and home insurance space. Increasingly products are being designed with multiple optional features, rather than as all inclusive products which might traditionally have been the case. Product covers such as breakdown, courtesy cars and legal expenses, which might have once been core to enhanced products are increasingly being sold as separately priced policy upgrades. On internet quote sites it is becoming more difficult for customers to be clear about what is and is not covered when shown the initial quotes from insurers, and this has brought more regulatory focus onto this market. Legislation and regulation The FCA review into the sale of add-on insurance has brought considerable attention to the traditional motor and home insurance area, as well as to sales of insurance alongside non-insurance products such as motor vehicles. While the FCA does not appear to be planning to ban the sale of add-ons, there is much more focus on how much add-ons cost, and equally importantly what benefits they provide the customer. 'Value' in particular appears to be important and insurers will increasingly need to show their customer just what they will be getting for the additional premiums being charged. No clear definitions yet exist of what constitutes an 'add-on', as opposed to something which is just a product option; Defaqto already rate some insurance covers which might be considered as add-ons: Current Star Ratings Motor Insurance Home Insurance Policy Add-Ons Motor Breakdown Motor Legal Expenses Annual Travel Home Emergency Associated Covers Motor GAP Boiler Breakdown Although it is difficult to agree a definition of what constitutes an add-on, Defaqto has identified a number of criteria that would indicate they should be treated as such: Cover is usually optional and at a fixed price per policy (i.e. not individually underwritten) Cover is described in a separate policy section, or often in a separate policy altogether, with definitions and exclusions that apply only to that add-on cover Customers can buy similar or identical cover on a stand-alone basis from other providers in the market. While these characteristics are not completely definitive they serve as a good starting point in identifying product add-ons to Star Rate. 3

4 New Star Ratings Using the characteristics outlined above Defaqto has narrowed down the list of potential unrated add-ons to a list of six major covers which match the criteria and for which a Star Rating might be appropriate. Over the past year Defaqto has been collecting and analysing product information on these add-ons, and has discussed potential comparison criteria in detail with a number of insurers and providers in the market. From 1 October 2015 we will be publishing new Star Ratings in the following product areas: New Star Ratings from 1 Oct 2015 Policy Add-Ons Motor Insurance Excess Protection Key Cover Personal Accident Misfuelling Cover Total Loss Courtesy Car Home Insurance Home Legal Expenses Products/propositions Our initial product analysis has included products which are sold as add-ons to other insurance products, as well as those equivalent products which can be purchased on a standalone basis. Star Ratings Add-On No. of Providers No. of rated products No. of rating criteria Motor Excess Protection Motor Key Cover Motor Personal Accident Misfuelling Cover Total Loss Courtesy Car Home Legal Expenses Across the six add-on areas we have identified and rated 635 products on offer from 244 separate distribution brands. 4

5 Appendix: Proposed 2016 criteria Given that these ratings will launch on 1 st October 2015, we do not propose to make any significant amendments to the Rating criteria for Unless there are significant changes in the market in the interim we propose to use the following criteria in our assessment process for the 2016 Star Ratings (core criteria are in bold text) Rating criteria Motor Excess Protection Named Driver Cover Accidental Damage Claim Initial Exclusion Period Malicious Damage Claim Available Cover Limits Vandalism Claim Claims Limit Per Year Flood Claim Main Driver Excess Claims Basis At Fault Claim Claim Notification Period Partial Fault Claim Claims Processed - Online Non-Fault Claim Claims Document Upload Non-Fault Time Limit Cooling Off Period - Basis Fire Claim Cancellation Return Theft Claim 5

6 2016 Rating criteria Misfuelling Cover EU Cover Limit (days) Transportation - Passengers Named Driver Cover Transportation Location Initial Exclusion Period Replenished Fuel Limit Incident Limit Hire Car Limit - Claims Limit Per Incident Hire Car Limit Days Claims Limit Per Year Accommodation Total ( ) Drainage Costs Excess Cleaning Flushing Costs NCD Affected Repair Costs 24 Hour Claims Line Replacement Part Costs Cooling Off Period Basis Replacement Parts Type Cancellation Return Transportation Car 6

7 2016 Rating criteria Motor Key Cover Initial Exclusion Period Garage Keys Cover - Other Private Car Duplicate Keys Exclusion Cover - Other Vehicle Keys Broken in Lock Cover Policyholder Keys Locked in Property Cover - Spouse or Partner Vehicle Hire Distance Cover - Named Drivers Vehicle Hire per Day Cover - Family Members Vehicle Hire Maximum Territorial Limits Max Hire Vehicle Size Max Claims Per Year Onward Transport Limit Limit Per Claim Loss Vehicle Transportation Limit Per Claim Theft Vehicle Delivery Loss Wait Period NCD Affected Claims Basis Loss of Key Excess Locksmith Charges Theft of Key Excess Lock Replacement Notify Police Theft Max Keys Per Lock Notify Police Loss Immobiliser Replacement Claim Notification (days) Any Key Co-Insurance Clause Fob Connected Keys Cooling Off Period-Basis Car Keys Cancellation Return House Keys 7

8 2016 Rating criteria Motor Personal Accident Max Age Claimant Loss of Speech ( ) Cover - Spouse or Partner Perm Total Disable ( ) Cover - Named Drivers PTD Wait Period (Weeks) Cover - Children PTD Occupation Basis Cover Passengers Loss of Hand ( ) Cover - Other Private Car Loss of Foot ( ) Cover - Other Vehicle Fracture - Arm ( ) Injury Period (months) Fracture - Leg ( ) At Fault Difference Burns - Third Degree ( ) Claim Limit - Person ( ) Hospital Benefit Day ( ) Death - Adult ( ) Hospital Benefit Days Death - Child ( ) Physiotherapy ( ) Loss of Limb - Extent Alcohol Exclusion - All Loss of Limb - One ( ) Claims From Assault Loss of Limb - Two ( ) Cooling Off Period Basis Loss of Sight - 1 Eye ( ) Cancellation Return Loss of Sight - Total ( ) NCD Affected Loss of Hearing - One ( ) Pre Existing Clause Loss of Hearing ( ) 8

9 2016 Rating criteria Total Loss Courtesy Car Cover Initial Exclusion Period Total Loss Car Period (TPF&T) Road Traffic Accident Delivery Time Restriction Accidental Damage Total Loss Courtesy Car Theft Fire Damage Total Loss Courtesy Car Beyond Economical Repair Theft (Attempted) Total Loss Settlement Theft (Unrecovered) Collection & Delivery Charges Malicious Damage Hire Car Card/Deposit Vandalism Damage Courtesy Fuel Contribution Flood Damage Doc Required Car Hire Storm Damage Add Terms & Conditions - Car Hire Claims Basis Insurance Cover Claims Reporting Period (Total Loss) Territorial Limits Claims Reporting Period (Unrecovered Theft) Driving Restrictions Like for Like Car Policy Claims Limit Alternative Travel Costs (Daily) Option to extend hire Alternative Travel Costs (Maximum) Cooling Off Period - Basis Total Loss Car Period (Comprehensive) Cancellation Return 9

10 2016 Rating criteria Home Legal Expenses Insured Temporarily Away Tenancy Disputes Property Other Home Sale & Purchase Cover Provided EU Employment - Employee Cover Provided Worldwide Employment Status - Eligibility Indemnity Limit Per Claim Employment As Employer Maximum number of claims permitted per year Employment Defence of Discrimination Claims Indemnity Limit Per Year Employment Defence of Prosecution Legal Representative Choice from notification Employment Exclusion Period Review of Prospects Legal Defence (excluding as Employee) Cover for Appeals Pleas in Mitigation Death/Personal injury Detention whilst abroad ( ) Clinical Negligence Probate Defend Contract Disputes Pursue Probate Contest Contract Disputes Defend Taxation - Full Enquiry Contract Disputes Exclusion Period Taxation Aspect Enquiry Contract Disputes - Minimum Claim Amount ID Theft Reinstatement of Credit Rating Contract Disputes - Excess ID Theft Loan rejection/administration fees Building Contracts Maximum value Jury Service Insurance Disputes Repudiated Claims Court Attendance Expenses Property Damage School Admission Disputes Property Damage- Exclusion Period Online Document Service Property Damage Minimum Claim Amount Discounted Legal Services Property Damage Excess Mediation Service Nuisance & Trespass cover Helpline 24 Hour Legal Advice Nuisance & Trespass Exclusion Period Number of additional Helplines Boundary Disputes Claim Notification Period Boundary Disputes Exclusion Period Cooling-off Period basis Planning Disputes Cancellation Return 10