Understanding how Defaqto ratings work

Defaqto ratings are displayed everywhere. We take a look at what they mean and how trustworthy they are.

An introduction to Defaqto ratings

If you’ve bought insurance before then you’ll most likely be familiar with Defaqto ratings. Their 1 to 5 star rating aims to categorise cover from most basic to most comprehensive and bring some degree of comparison between different providers. Let’s take a closer look at how they rate insurance products and what those ratings mean for you and your policy.

What is Defaqto?

Defaqto is an independent financial research company with over 400 analysts that research and rate financial products. They assess each product and their features using a DNA score then rank them using their star rating.

The star ratings exist to give you more confidence in the company that you are considering buying a service from is reputable and how comprehensive it may be.

5 star rating is the best you can get and represents a product which is the most comprehensive according to Defaqto’s matrix.

What products do Defaqto rate?

Defaqto ratings are used across thousands of financial products covering:

  • Home insurance
  • Car insurance
  • Health insurance
  • Life insurance
  • Pet insurance
  • Travel insurance
  • Banks
  • Insurance brokers
  • Credit card providers
  • Financial advisors

What factors does Defaqto rate on for pet insurance?

Defaqto’s DNA score is made up of a wealth of different factors, determining the quality of the product rather than price. In fact, there are 202 factors that they compare and rate each pet insurance product against.

Among those factors, the key things that go into making up the rating are:

What do Defaqto ratings mean?

The definition of each of the 1 to 5 star ratings are as follows:

  • 1 Star: Offers a basic, low level offering
  • 2 Stars: Offers a less than average quality offering
  • 3 Stars: Offers an average quality offering
  • 4 Stars: Offers a good quality offering
  • 5 Stars: Offers one of the highest quality offerings in the market

The ratings above are different for each product, they don’t rate the provider as a whole. So it is highly likely that each provider will have products across the range of star ratings, but they may only be actively promoting those products that are 5 star.

Drawbacks of Defaqto ratings

There are a few drawbacks to the model that Defaqto.

  • They don’t take into account price: The price will always be a key determining factor in a buying decision. So it is worth factoring in prices from providers or price comparison sites alongside the product information from Defaqto to make a more well rounded decision.
  • They don’t take into account customer service: A product as emotional as pet insurance, the service and claims experience is key to the quality of the product. In order to understand this it is worth looking for customer feedback and reviews alongside Defaqto’s independent rating.
  • It’s subjective: What Defaqto deem as important could be different from what’s important to you. This is always going to be difficult to achieve for them as everyone has different needs. So it is worth checking what’s important to you when you’ve narrowed down your potential insurance options.
  • Defaqto’s commercial model: One of the ways that Defaqto make money is by selling annual licenses for their ratings and logos. Most providers choose to showcase their 5 star products only, and so with that being the case, there is a commercial incentive for Defaqto to rate more products at 5 star standard. Whilst we don’t know the full details on how their DNA scores work or their thresholds for each star rating, we do know this is how their revenue model works and which star rating most providers choose to display.

Alternatives to Defaqto

If you’re looking for other ratings to compare providers, then there are some other ratings companies that can give a view of how comprehensive financial products are.

  • Fairer Finance: Relatively new to product comparisons, Fairer Finance work in a similar way to Defaqto but their product criteria tend to be a little stricter. They also work with finance companies to simplify policy wording to make things straightforward to policyholders.
  • Moneyfacts: The Moneyfacts product ratings have been assessed for over 30 years and work similarly to Defaqto, using thresholds to provide products with up to 5* ratings. They also have an annual awards ceremony which crowns the Pet Insurance Provider of the Year.
  • Which?: A very well known provider of product reviews across the UK, they conduct an annual review of pet insurance providers and off the back of these reviews they produce their ‘Best Buy’ logos for cat and dog insurance.

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