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Insurance Company Ratings
Is the company you sign on .. reliable?
It is important to understand the financial strength of insurance companies when you are comparing insurance quotes.
Several national rating institutions rate insurance companies. For the general consumer, looking up these ratings is only a formality, since most of the well-known carriers are going to be a safe bet. Moreover, independent agents would be unlikely to recommend a company with dubious financial standing. Still, if you're considering a smaller, unfamiliar insurance carrier, you might consider this research time well spent.
Financial strength ratings are an analysis of a wide variety of risks that could affect an insurance company's long-term viability. Insurance companies have failed or ceased to operate due to inadequate financial strength, competitive forces, or changing dynamics in the marketplace. There is a belief that ratings are not completely unbiased. In any rating system, preferences can be seen. Here are the major rating companies:
A.M. Best
A.M. Best Company is the leading provider of ratings, news and financial data for the insurance industry worldwide and Best's Ratings are recognized as the benchmark for assessing the financial strength of insurance related organizations and the credit quality of their obligations. Their scoring of companies falls into these categories:
A++ and A+ Superior : Superior ability to meet their ongoing obligations to policyholders
A and A- Excellent : Excellent ability to meet their ongoing obligations to policyholders
B++ and B+ Good : good ability to meet their ongoing obligations to policyholders
B and B- Fair : fair ability to meet their ongoing obligations to policyholders
C++ and C+ marginal : marginal ability to meet their ongoing obligations to policyholders
C and C- weak : weak ability to meet their ongoing obligations to policyholders
D poor : weak ability to meet their ongoing obligations to policyholders
Most new companies start out at a mid level rating and then move up. If you're considering a smaller, unfamiliar insurance carrier, you might want to research their rating, but be aware that newer companies sometimes require time to get a higher rating.
J.D. Power and Associates
J.D. Power and Associates collects data from individual policyholders nationwide and rates them according to coverage options, price, claims handling, satisfaction with company representatives and the overall experience. A quick visit to the J.D. Power Consumer Center will give you a feel for how the major carriers stack up. J.D. Power also publishes an annual survey of major auto insurers
Weiss Ratings
They offer free lists of the strongest and weakest financial services companies in the nation. Those companies identified as the strongest are to be commended for this accomplishment. However, if you are doing business with a weak company, you may want to consider your other options along with the cost of making a switch.
Standard & Poor's Ratings
Standard & Poor's is one of the world's preeminent providers of credit ratings. They provide a wide range of other products and services designed to help individuals and institutions around the world make better-informed financial decisions with greater confidence. Their product contains nearly 8 million ratings on approximately 40,000 issuers across the globe plus 240,000 research and commentary articles. And to help you analyze today’s market actions in context, their archives more than 16 years of ratings history. Some subscription and registration may be required.
Fitch Ratings
The Fitch Ratings Insurance Group provides ratings and research on insurance and insurance-related companies worldwide. Because of the increasing globalization of insurance markets, the group coordinates all research and analysis through a Global Insurance Ratings & Policy Committee. Their goal is to achieve consistency of rating methodology across countries. At the same time, Fitch strives to ensure that its insurance ratings fully incorporate the unique aspects of local markets by assigning lead analysts with local market knowledge and presence. The Insurance Group balances local expertise with global oversight to distinguish their ratings in the marketplace.
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