The Value of Choosing a Reputable Insurance Company: Review The Ratings
Although there are plenty of reputable insurance companies out there, it’s in your best interest to do a little digging before you commit to a particular company. The reason behind this is that there are tools out there to help you differentiate between a good and a great company. When you’re making an investment in terms of an insurance policy, particularly life insurance, that’s a long-term commitment. You want assurance that they have the financial backing and history of quality customer service to make it over the long haul. Finding out that the carrier isn’t able to pay claims could be disastrous for you down the road, so put the work in ahead of time to look at the factors that set carriers apart.
Insurance coverage has gotten more complicated over time, but you’re essentially putting your trust in the insurance carrier that in the event something happens to you in the future, that you’ll be protected. This is why you need an insurer who has experience and a quality reputation so that you have peace of mind.
Overwhelmed by trying to figure out how one company stacks up against the others? Thankfully, you don’t have do the research yourself- there are five major ratings services that take on this task. Each company uses criteria to award a report card to the insurance carrier using an alphabetical rating scale. Bear in mind that despite this scale, a B+ from one rating company might not be the same as a B+ from another rating agency. A.M. Best, however, has been around since 1899 and is widely recognized as the most authoritative rating agency.
A.M. Best reviews the insurer’s financial strength and evaluates the carrier’s ability to pay contractual obligations and meet ongoing policy needs. This involves careful analysis of the company’s strength, business profile, balance sheet, and operating performance. A carrier that has been rated B+-A++ are considered able to meet their obligations. Companies with lower report card scores, however, could be in jeopardy. Every grade is also accompanied by an outlook for the future of that company, denoted as “positive”, “negative”, or “stable”. This allows a customer to review not just the past and present strength of the company, but their possible future ability to pay out claims.
If the financial ratings sound ominous, it’s because they can be an indication of serious troubles ahead. You should never select an insurance carrier based on premiums along, but businesses owning workers’ compensation policies nationwide from a carrier that filed bankruptcy in 2011 learned that the hard way. Just one month before the carrier filed for bankruptcy, A.M. Best downgraded them from “B/Fair” to “E/Under Regulatory Supervision”. While the difference between a B and a B+ in school might not be that wide of a gap, you should carefully consider opting for any kind of insurance coverage from a company with lackluster ratings. You expect your carrier to pay out claims, so count on these ratings to inform your decision.