How much will a job title cost you?

In this blog post, we'll uncover the extent to which small variances in job title can affect quoted premiums and explore the ramifications of such practices in this new Consumer Duty world.

In August, we conducted a piece of research to understand how variations in job titles and business types can affect quoted insurance premiums. Using the same risk profile, we conducted four quote runs through a single Price Comparison Website, with each run featuring a slight variation, and the results were surprising.

​The profile we used was for a chap called Jake. He’s 31, drives a Vauxhall Astra and is a Healthcare Assistant in the NHS. To test the impact of variations in job titles and business type on the quoted premium, we made the following amends to his profile information in each quote run:

The results 

The first two quote runs, which tested the business type (Health Care NHS vs. Hospital), returned exactly the same quotes.

However, runs 1 and 3 revealed a difference of over £40 between the most competitive quotes returned for Healthcare Assistant and Nursing Assistant, which is shocking, considering these two job titles can be used interchangeably, according to the International Career Institute.

Quote runs for job titles Healthcare Assistant and Support Worker (run 1 vs 4) returned a lesser differentiation of just under £30, even though there are bigger differences in the roles themselves.

How is this fair?

Whilst the majority of consumers remain in the dark on the issue, it’s well-known within the industry that job titles are used universally as a rating factor. In June this year, MoneySuperMarket published an article revealing the most expensive jobs titles for car insurance, with the likes of Hospital Consultant, Car Salesperson and Barber topping the list.

The article goes on to say that consumers have the opportunity to select similar jobs titles to their own to get the best price, whilst warning against committing fraud. However, the reality is a consumer can’t game the system to find the best quote. Running four quotes, as we have, would set off every fraud detection system going.  

With consumers left at a disadvantage, this conjures up some pressing questions. Should insurance providers be allowed to charge different rates based on not just similar, but synonymous job titles? Would they be able to justify such practices? And do they even know they’re doing it?

Cunning or unconscious?

As we all know, insurers rely on vast amounts of historical claims data to make predictions about claims they might face in the future and calculate the price a consumer needs to pay.

Whilst many of the tabloids would love to believe it, in reality there isn’t a committee of cunning people sitting around a boardroom table dreaming up the next way they can screw over another cohort of consumers.

However, many insurers are sitting upon ancient legacy systems and a tangle of mappings that possibly haven’t had the thorough auditing they deserve. Therefore, many will likely be blind to the potentially unjustifiable prices they are quoting to consumers.


Time to wise up

With the new Consumer Duty now in place, insurers are required to evidence that they are delivering ‘good outcomes’ to consumers. Outcome 2 of the Consumer Duty is all about ensuring consumers get ‘fair value’, meaning that the amount a consumer pays for a product or service must be 'reasonable' when compared with the benefits the product or service offers.

The FCA expects firms to be able to, hand on heart, attest to meeting this regulatory requirement. And whilst the regulator has yet stumbled across this industry-wide issue regarding job titles, it’s only a matter of time.

With this regulatory nightmare heading your way, it’s time to wise up by gaining access to granular pricing insights in our Daily Price Benchmarking service, and ensuring your mappings are squeaky clean with our Data Mapping Diagnostic service. By truly understanding how your pricing practices are translating into the quotes seen by consumers, you can work to ensure something as simple as a job title doesn’t end up costing you dearly.

Optimise your competitive position with daily price benchmarking. 

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