Understanding Insurance Carrier Ratings

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All insurance carriers and companies are given ratings in order to portray their overall strength and trustworthiness. There are several ratings companies who evaluate various factors about insurance companies and come up with a final grade for the carrier. These grades effect how insurance agencies and other providers view the products and services offered by these carriers, however many consumers don’t really understand these ratings.

While it’s obvious that an A+ rating is good, it’s also important to understand what types of factors are included in these insurance carrier ratings, what the range of possible grades are, and more.

Here are some important points to know about insurance carrier ratings:

  • A leading company in this industry, A.M. Best Company, provides credit ratings of insurance carriers based on both quantitative and qualitative data. Things that are considered include the carriers’ balance sheet strength, business profile, operating performance, and debt security details.
  • A Financial Strength Rating is also conducted for insurance companies, which takes into consideration the insurer’s financial strength and ability to meet its contract obligations. Two other main ratings are the Issuer Credit Ratings and the Debt Ratings.
  • The ratings also take into consideration of and comparison with industry standards, the performance of similar companies, management, operating plans, and other factors.
  • Each company that is rated by A.M. Best is assigned a primary analyst, who is in charge of maintaining a relationship with the carrier and performing the credit analysis.
  • Ratings can be re-evaluated after major company changes, regardless of the annual schedule.
  • Companies can choose to only show one of their ratings, or to release all of their ratings.

The bottom line is: The better rated the insurance carrier, the more reliable of a choice it will be for you! Now that you understand all of the details that go into the insurance carrier ratings, be sure that while shopping for insurance in Massachusetts, work with agencies that have relationships with top-rated carriers.
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