Insurance Companies (Carriers) don’t necessarily have a perfect reputation. Recession-like behavior in the economy and rising premiums certainly are not helping buyer trust. To make matters worse, articles about claim denials and cancellations are circulating to warn the public. “What’s the point of coverage if they are going to deny the claim?” Is a question we often hear, as weary buyers look for peace of mind.
Much like any collective, those receiving negative attention are bound to stand out. The insurance industry is no different. Understanding the financial strength of an insurance company is a fundamental performance indicator of claims handling and stability of the carrier. Timely and fair valued payouts are correlated to the credit rating of the company.
The credit rating for the insurance industry is performed by an agency called AM Best.
–> Insurance companies are ranked by their AM Best score.
The scores extend to A++ and are similar (only in scoring) to health inspections at restaurants. Carriers with at least an “A-” are considered solvent and dependable for claims. The rest of the scale can depict a credit scenario needing improvement. Our agency, Wes Connor Insurance, does not sell products from carriers rated below an A- to protect our clients from insolvency issues.
The stories surrounding claim denials and cancellations are generally limited to companies whose AM Best score is reflective of doubt and could have been avoided.
AM Best is an international credit rating agency established in 1899, located in 100 countries, that provides analysis on over 16,000 insurance companies. Their status as a statistical rating organization is recognized by the Securities & Exchange Commission (SEC) and as a credit provider by the National Association of Insurance Commissioners (NAIC).
Do ask what the quoted carrier’s AM Best score is. Don’t assume every insurance company is boasting the same capability to back their word in an unpredictable world.
