How to Assess the Strength of Your Insurance Company
09 Mar 2016
After careful deliberations you have concluded insurance will help you (or your loved ones) achieve financial success. Now I have not discussed what type of insurance, just the fact it is insurance. In my opinion the single greatest item (yes, more important the cost) is the strength of the company you are relying on. There are 4 independent agencies that rate the financial strength of insurance companies:
AM Best Company. Inc: www.ambest.com
Fitch Ratings: www.fitchibca.com
Moody’s Investor Services: www.moodys.com
Standard and Poors Insurance Ratings Services: www2.standardandpoors.com
Some points to consider:
– Companies are likely to highlight a higher rating from one agency and ignore a lower one, or possibly select the most favorable comments from one and ignoring negative comments from another.
– You need to understand each companies rating code is different from the others. An A+ from one has a different meaning than an A+ from another. Moody’s does not even have an A+ rating.
So even though you may feel the cost/premiums are the most important item to consider, don’t neglect the quality of the company as well. As I have said before, “You don’t buy a parachute to try to save money!”
Best of luck–Jeff