What Do Insurance Company Ratings Mean

An insurance company credit rating is the opinion of an independent agency regarding the financial strength of an insurance company.

What do insurance company ratings mean. The opinion represents a comprehensive analysis consisting of a quantitative and qualitative evaluation of balance sheet strength operating performance and business profile or where appropriate the specific nature and details of a security. The fact that an insurer can pay claims does not mean it will do so efficiently or effectively. If an insurance company s comdex ranking is 80 this means it scores higher than 80 of all other insurance companies with multiple ratings. Your vendors are ideally working with insurance companies whose ratings meet your individual requirements as recommended by your broker and have been reviewed by your attorney and any other outside entities setting specific am best rating requirements.

An insurer s financial strength rating fsr indicates the stability and reliability of its financials. In addition to your own insurance program it is important to ensure that those who are performing work on your behalf or entering your buildings for routine maintenance have carriers that are stable today and into the future. A best s credit rating bcr is a forward looking independent and objective opinion regarding an insurer s issuer s or financial obligation s relative creditworthiness. An independent agency determines an insurance company s credit rating and gives their opinion on the financial strength of the company.

Insurance company ratings reflect insurers financial ability to pay claims. By contacting insurance companies or using various insurance rating services you can obtain detailed rating reports. Some of the key factors used to determine an insurance company s rating include financial reserves claims payment history business focus and the company structure and management style. The comdex rating is on a number scale of 1 to 100 with a higher number being the better ranking.

Insurance companies receive their financial strength ratings from insurance rating organizations which carefully analyze and evaluate a company s financial performance both past present and future. Good insurance financial ratings are defined as extremely strong very strong or strong and commonly graded as a or aaa down to a or b depending on which ratings service is giving the grade. It is rather an indication about how the agency rates them as to the likelihood of their paying out for policyholders claims. In other words an insurance rating is a rating company s informed opinion of how likely it is a given company can pay its customers claims.

An insurance company rating is an indicator as to the financial strength of an insurance company. Each rating agency can be different in how they rate a particular. The credit rating of an insurance company isn t an indication of how well the company s securities will be able to perform for investors.