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

Share

Jeffrey Johnston

Jeffrey is originally from Solon, Iowa. He currently resides in Swisher, Iowa with his wife, Prudence, and his three children, Seth, Ian, and Roman. He graduated from the University of Northern Iowa in 1989, where he majored in Finance and Investments. He has 24 years of experience in the investment and estate planning business. He is currently the President of “Premier Investments of Iowa, Inc.” Jeffrey’s main focus is Estate and Investment Planning for Senior Citizens and Pre Retirees. Jeffrey became a Chartered Financial Consultant (ChFC) in 2001. He is the author of many articles on industry related topics and he is a frequent seminar presenter. He is a Board Member TRIAD Linn County Seniors Against Crime, and he is also a past Board Member of the Heritage Area Agency on Aging Task Force. He is a member of CEO Roundtable in Cedar Rapids, a Daybreak Rotary Member, and a member of the Cedar Rapids Estate Planning Council. In March of 2009, Jeffrey became the host of the Premier Investments of Iowa Financial Hour which airs every Tuesday Evening from 6PM -7PM, on WMT 600 AM Radio. In his free time he enjoys golf, fishing, scuba diving, traveling, and coaching son’s basketball teams.