It’s no longer enough to choose an insurance company simply because they offer what appears to be the best coverage or lowest rates. You also need to know the company’s financial security, especially in challenging economic times when even large firms can face solvency pressure.
Additionally, you want to know about an insurer’s track record for paying claims and overall customer satisfaction. Not all insurance companies are the same, so take a hard look at a prospective insurer before handing over a big premium check; you can often start with resources such as Insurance Companies.
How can you find this information? It’s easier than you think: several major organizations publish company ratings, and many rating reports or summaries are available for free. Be aware that each rating service uses a letter-grade system (for example, “AAA” through “NR”), and the meaning of a given letter can differ among agencies.
A “C” with one rater might indicate average performance, while with another it might suggest serious financial challenges—so understand the rating scale each firm uses. Also note that some raters only publish ratings for the largest ~200 insurers, while others cover a broader set of companies. For a deeper look at a specific insurer you’re considering, consult a detailed company profile such as a Company Profile for Insurance.
A.M. Best
This agency specializes in insurance and reinsurance. It covers a wide range of insurance markets, including international operations, and offers in-depth analysis and commentary on insurer financial strength.
Fitch
Fitch provides global ratings that combine local and international expertise and publishes commentary on industry trends and issues affecting insurers.
Moody’s Investors Service
Moody’s issues ratings that focus on an insurer’s financial health and outlook across life, property and casualty, mortgage, and other lines; some content requires registration to access.
Standard & Poor’s
S&P provides international ratings for a wide range of insurance-related entities and products, including life, property and casualty, annuities, and reinsurance; rating details and analytical reports are available through subscription services.
When using any rating service, read the methodology and understand the scope of coverage and any subscription requirements. If you prefer a personal review, you can always talk to an agent who can help interpret ratings in the context of your needs.
Frequently Asked Questions
How should I use insurer ratings when choosing a company?
Use ratings as one factor alongside price, coverage, and customer service history; they indicate financial strength and claims-paying ability but don’t replace policy review.
Do all rating agencies use the same scale?
No. Agencies use different letter-grade systems and methodologies, so compare their definitions before drawing conclusions.
Are rating reports free to access?
Some summaries are free, but detailed reports or full access to an agency’s database may require registration or a subscription.
What if an insurer has mixed ratings from different agencies?
Look at the trend and underlying rationale in each report; consistent downward trends or negative commentary are more concerning than a single lower rating.