It’s in the stars !

8 March 2016
February saw the annual launch of Defaqto’s Star Ratings and Diamond Ratings – Star Ratings for products and Diamond Ratings for funds.

This year, we have once again awarded our highest Rating of 5 Stars to Royal London's Critical Illness Cover, Income Protection and Whole of Life Assurance.

5 Star Ratings indicate that the product is one of the highest quality offerings in the market, with a comprehensive range of features and benefits.

With the rise of the price comparison site and the resultant fixation on price as a differentiator, particularly in the general insurance market, people might be forgiven for thinking that this is the only consideration when choosing life cover and critical illness too. Professional advisers, however, have the opportunity to differentiate themselves but their proposition must focus not on price and sourcing the cheapest cover but rather by recommending quality products that meet more of their customers' needs.

Defaqto's area of expertise is in analysing products and thereby supporting better financial decision making. Many advisers have access to Defaqto Engage, the comprehensive comparison system where they can analyse in detail the products and their features; and Defaqto Star Ratings are visible to both consumers and advisers.

Year on year what our Star Ratings show is that there is a good and varied range of products in the market. In the professional adviser space, our ratings cover a range of areas across pensions, investments - including platforms and Discretionary Fund Managers - and life and protection products.

The ratings are completely unbiased and we rate all propositions in the market. This means that the ratings may be used with confidence to segment the market for consumers and advisers demonstrating at a glance which are the comprehensive products that may be suitable for higher net worth individuals and which are the simpler products that may be more suitable for people with more straight forward requirements.

We would not expect advisers to use Star Ratings to select products for clients in isolation but we believe they are helpful in strengthening their proposition to their customers. For clients with more complex requirements, the recommendation of a better quality product that may demand a higher premium is supported by a 5 Star Rating. Similarly, where a simpler, cheaper solution is being considered, the lower Star Rating will help reinforce the cost versus cover message within the customers' minds and establish an upsell position. Star Ratings and Diamond Ratings therefore demonstrate quality to advisers and their customers and support the advice process.

For life, critical illness and income protection products, our in-house team analyses some 30 separate features and benefits when calculating the Rating. The more comprehensive a product is the greater the overall score and the higher the Star Rating is likely to be.

Additionally, based on our analysis of each product area, market developments or regulatory influences and open discussions with product providers we select a set of features which we consider as 'core criteria'. These are areas where we believe 5 or 4 Star rated products should offer a minimum level of benefit.

When an adviser has completed their fact finding and researched the market for the most suitable protection products, Defaqto Ratings giving them and their clients the assurance that the proposition they have selected is of quality.

Focusing on price alone could mean they run the risk of buying an inappropriate product that doesn't meet their needs and they are only likely to discover this when they need to make a claim.

To find out more about Defaqto Star Ratings

About the author

Ben Heffer

Insight Analyst. Defaqto

This website is intended for financial advisers only and shouldn't be relied upon by any other person. If you are not an adviser please visit

The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The firm is on the Financial Services Register, registration number 117672. It provides life assurance and pensions. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL.