2016 Star Ratings Home Emergency Cover Discussion paper

Transcription

1 2016 Star Ratings Home Emergency Cover 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 Home Emergency Cover and, based on these, sets out the areas where we would like to consult the industry as part of ensuring that our ratings process remains robust and transparent. 2

3 Key developments and trends The market We have reviewed developments in the home emergency market, considering legislation and regulation, provider changes, and home emergency products and have concluded that there has been no significant changes. Legislation and regulation The FCA review into the sale of add-on insurance has changed our focus, as it is clear that the FCA intends to ban the opt out sales process. Following our review of the add-ons market, we have reviewed the current Star Rating criteria and are proposing to make a change based on the cancellation return given within the cooling-off period. Providers We have been collecting data on home emergency products for 3 years and can see that during this period of time the number of providers has increased by 13% however the total number of products available has increased by a greater percentage. Home Emergency Cover % change (2012 to 2015) No of Providers % No of Products % Average products per provider % Products/propositions We looked at the way in which providers' products and propositions are changing since the launch of our Home Emergency Star Rating. In general there has been little change in the way that products are distributed, however it is noted that the only method which has increased during this time is Standalone. 3

4 Key implications for the 2016 Ratings process Product area weightings The criteria have been split into the following areas in order to show the weightings for each within the Ratings: Rating area 2014 No. of 2014 % share of Star Rating Features 2015 No. of 2015 % share of 2016 No. of 2016 % share of Policy Cover 44 80% 37 77% 36 75% Policy Excesses/Terms 5 9% % % Claims Management/Conditions 5 9% % % Helpline Services 1 2% 1 2% 1 2% Total % % % At each Star Rating review we consider market changes and the relevance of these factors. As you can see the statistics above demonstrate that we will only change the criteria should the need arise following market changes or amendments, or potential amendments in legislation. What does good look like? For 2016 we are introducing Cooling Off Period Basis as an additional core criterion, all other core criteria remain the same. Rating area Core criteria set for the following Policy Cover Maximum Claims Limit per Year Central Heating Claims Limit ( ) Boiler Breakdown Claims Limit ( ) Plumbing and Drainage Claims Limit ( ) Policy Excesses/Terms Initial Exclusion Period Boiler Breakdown Exclusion Period Excess Standard Cooling off Period basis 4

5 Areas for discussion These are the areas where Defaqto would like to discuss their proposals, and receive any feedback that you might have. Alternative Accommodation Addition of Cooling- Off Period Basis Add-on Products We propose to remove the current criteria Alternative Accommodation - Limit ( ) and Alternative Accommodation Limit (nights) and replace with one feature considering the maximum overall sum insured provided for alternative accommodation We are proposing to add Cooling Off Period Basis as a Star Rating criterion to reflect the return of premium if the policy is cancelled within the cooling off period. This will also be a core criterion for 4 and 5 Star We would also welcome your feedback on the whether the FCA review into the sale of add-on products should have a greater influence on our Star Ratings in the future 5

6 Appendix: Proposed 2016 criteria Based on the above analysis, we propose including the following criteria in our assessment process for the 2016 Ratings (core criteria are in bold text; new criteria are highlighted in green). Proposed criteria Initial Exclusion Period Water Supply Pipe Maximum Claims Per Year Water Supply Pipe Type Maximum Claims Limit Per Year Water Supply Pipe Outbuildings Central Heating Cover Electric Supply Failure Central Heating Claims Limit ( ) Electric Supply Accidental Damage Central Heating Accidental Damage Gas Supply Failure Radiators Gas Supply Pipe Limit Boiler Breakdown Home Security Cover Boiler Breakdown Claims Limit ( ) Accidental Damage External Windows Boiler Maximum Age Keys Loss Boiler Breakdown Exclusion Period Keys Theft Annual Boiler Service Roof Cover Plumbing & Drainage Cover Vermin Removal Plumbing & Drainage Claims Limit ( ) Uninhabitable Period Plumbing External Alternative Accommodation Maximum Limit ( ) Internal Damage Clause Alternative Supply Hot Water Pipes Unoccupancy Period Cold Water Pipes Emergency Claims Helpline Overflow Pipes Claims Reporting Period Frozen Pipes Approved Tradesmen Water Storage Tank Response Time Guarantee Tap Repairs Repairs Guarantee Toilet Unit Failure Excess Standard ( ) Drainage System Cooling off Period Basis The table below sets out the 2015 criteria that we are planning to remove for Criteria planned for removal Alternative Accommodation Limit ( ) Alternative Accommodation Limit (nights) 6