19 June 2017
Fairer Finance launches new star ratings
FOR IMMEDIATE RELEASE: Monday 19th June 2017
Consumer group Fairer Finance has today launched a new set of insurance product ratings, designed to help customers choose better quality products.
All car, home and travel insurance products that are available for customers to buy direct - or through comparison sites - are included in the ratings. Other insurance sectors will be added over the coming months, as well as ratings for banking products such as credit cards and bank accounts.
The ratings are calculated using a series of red line requirements. Products must pass all of these to qualify for five stars, and are marked down to lower ratings for missing one or more of these.
The red line requirements are based on research around the cover levels that most customers would need.
Unlike similar ratings systems, companies are not rewarded for offering unnecessary levels of cover, or product features with little or no value. Fairer Finance's scoring system has been designed to stop companies from gaming the star rating system - as happens with other ratings providers.
Fairer Finance has also awarded far fewer five star ratings than other ratings providers. In car and home insurance, less than 10% of products are rated 5 stars. This compares to as many as 40% of products being rated 5 stars by other ratings providers.
James Daley, managing director of Fairer Finance, said: "More and more people are buying their insurance without advice, at the same time as products are becoming more complex.
"Comparison sites are great at helping people shop around in price, but customers also need to know whether they are buying a product that has the cover they will need.
"As it stands, the existing ratings systems in the market are not always helping customers make better decisions. Almost 40% of insurers are receiving 5 star from other ratings providers - but our research shows that companies are gaming the system and often don't deserve such high scores.
"Our ratings are not meant to be a replacement for advice. We still think customers should take the time to do their homework and make sure they get a product that meets their needs. But if people are looking for a short cut, we believe our ratings are more useful and are fairer than those that people are currently relying on."
The new ratings complement Fairer Finance's existing Customer Experience tables - which rank brands based on customer polling, complaints data and Fairer Finance's unique transparency analysis.
Daley continued: "Ideally, customers buying a financial product will look at both our new product ratings and our customer experience scores, before deciding which company to give their business to. If everyone started to base their decisions on our ratings, rather than focusing on price, it would raise standards in the industry and allow companies to start competing on quality and service again."