Can £5 Additional Premium Spend Really Make a Significant Difference to Product Performance?

The answer is yes!

In fact, it can make as much as a 2.5x difference to a policyholder’s chances of successfully making a claim.

You’ve heard it many times before – that famous “price isn’t everything” mantra, along with industry warnings that focusing on the cheapest quote at the expense of cover value is a false economy.

But focusing on such a high-level evaluation of product value is not the end of the story. Two policies might on paper look almost identical in terms of heads of cover, but under closer inspection they could differ hugely on performance.

Whether a policy is backed by rated, unrated capacity or embedded as part of a wider purchase (although both options do have a place in the market, of course), there are many reasons clients could be left with a product that’s unfit for their individual needs.

We recently evaluated two competing products – on paper the same, only £5 difference in price, with each backed by reputable capacity providers (one rated and one unrated). We discovered the unrated policy only has a 29% claims acceptance rate, whilst for the rated policy this was 75% – quite a stark difference, and yet only costing £5 more.

Product performance versus price is nuanced to say the least and of course this is where the expertise of a broker is highly valued.

So, what are the pitfalls you could unwittingly drop your clients into if you don’t dive deeper into policy performance?

1. Look at the quality of the claims and legal service: Explore complaint levels and types. Delve into ease of access to claims and legal support – is it a generic one-size fits all approach or does the provider offer access to specialist advice (which is vital for complex and non-standard policies)? What is the provider’s

Trustpilot rating and how do policyholders rate the claims experience and after-service care they received? Embedded policies, for example, are notorious for only offering the basic level of legal support.

2. Look at claims frequency: How often are policyholders actually claiming on this policy? Frequency is an important measure to determine the likelihood that the insurer will pay out on claims, and also how valuable the product really is.

3. Look at claims acceptance rates: a policy may look great in terms of heads of cover, but these might turn out to be so stringent they’re not worth the paper they’re written on – rendering them unclaimable. Dive deeper into the types of claims accepted, and more importantly those that are rejected, to get a more granular view of exclusions, indemnity limits, and restrictive wordings that could damage policy performance for your clients.

4. Look at average time to settlement: Policies that look the same on paper may actually differ hugely on how long it actually takes to settle a claim. Again, look at complaints and reviews, or even better, speak to the provider to understand how they approach claims and legal support. Do they have inhouse experts, are the team well trained, and do they use technology to deliver a more streamlined and faster result?

5. Look at fair value statements: It is important you scrutinise a product’s features, as well as hidden fees or limited coverage issues that might not be in the client’s best interest, this is a good and accessible place to start.

Price alone may not be an indicator of product quality and performance. Our advice is always look at the granular detail, and benchmark policies against a wide range of factors before advising clients on which options are best suited to their needs.

They won’t thank you if they can’t claim or cannot access quality claims and legal support when the worst happens – especially if it’s for the sake of £5.