A Publication of WTVP

Many people wonder which insurance company to do business with under the current economic situation. I would like to provide you with a few topics to think about when deciding. While there are no guarantees in this life (except death and taxes), there are ways to evaluate the stability, performance, safety and suitability of an insurer—before making a commitment. Here’s a guide on how to do just that:

  1. Work with local professional insurance agents. Have them identify four or five insurance companies for consideration. These professionals align themselves with multiple companies to meet the ever-changing needs of the community. After reviewing your needs and wants, they can shop the insurance marketplace to match you with a carrier.
  2. Look to the ratings. An evaluation of companies’ financial strengths and claims-paying abilities can be found in the ratings given by third-party rating firms. These private firms perform in-depth reviews of a company’s investments and holdings, its past performance and expectations for both current and future performance, the positioning of its investments in light of current economic conditions, and other factors which can affect a company’s long-term stability.

    It’s recommended that you select a company that has earned at least an A from A.M. Best; Aaa or AAA from one of the other ratings services; and no rating lower than AA- or Aa3 from any other ratings agency. Contact the insurer directly and ask for their ratings and the rating companies used. Review the rating companies’ publications; many are available on the web—, for example.

    It’s important to remember that rating firms may use different assessment criteria in their reviews. In addition, not every insurer is rated with any or all of the rating firms, as insurers must pay an annual fee for these ratings, but most insurers will be rated with A.M. Best. While the ratings themselves are not ironclad guarantees, it stands to reason that the higher the rating received, the lower the likelihood an insurer will experience serious financial trouble in the future.

  3. Measure your risk tolerance. By now, you and your agent have narrowed your list to two or three insurers. Learn their base product line, pricing models and structure, underwriting trends and the risk factors in each. But make sure you’re comparing identical products. Think about how much risk is acceptable to you, and then look to the companies whose products best match that level of risk tolerance. You should consider if the company’s product lines are diverse enough to fit both your current and future needs.
  4. Experience, credentials and reputation. Success breeds success. The experience and credentials of an insurance company are very important. Many companies try to “buy business” in a certain marketplace by offering low prices with the knowledge of substantial increases in the near future. Quality companies with solid management do not operate with that mentality to survive over the long haul. Listen to your business associates’ positive experiences from their insurance carriers. Many times you will continue to hear the same names. Value that information. iBi