Why Your Insurance Company's A.m. Best Rating Matters
These days there are many choices when it comes to insurance coverage
. With so many choices, it may seem overwhelming trying to determine which company is best for you. Price matters, of course, but what good is a low premium if you don't get the coverage you need when it matters most? Luckily, there is a good way to determine the credibility and reliability of your insurance company, and that is by checking to see what their A.M. Best rating is.An A.M. Best rating is given by the A.M. Best Company, a full-service credit rating organization dedicated to serving the financial services industries that has been rating companies for over 100 years. Policyholders can refer to a company's A.M. Best rating to determine its strength and creditworthiness. In order to determine an insurance company's A.M. Best rating, a complex process is involved, one that looks at all aspects of the company to determine is stability and reliability. When a company requests an A.M. Best credit rating, a complete profile of the company is determined and assessed by A.M. Best. Both public and proprietary financial information is reviewed, including annual and quarterly financial statements, reinsurance security, annual business plans, and certified actuarial and loss reserve reports. Next, an analysis is performed by A.M. Best that incorporates both quantitative and qualitative measures. The organizations financial health is analyzed, including underwriting, credit, interest rate and economic regulatory factors. It includes comparisons to peers, industry standards and proprietary benchmarks, as well as an assessment of operating plans, philosophy, and management.
In the end, the company being rated is awarded an A.M. Best rating that can range from A++ to S. The most secure ratings are A++ and A+, which represent a "Superior" rating. A and A- indicate an "Excellent" company, and B++ and B+ ratings are a good company. Vulnerable companies are those listed in the B to S ratings, with E companies being those under "regulatory supervision", F companies are "in liquidation" and S companies are "suspended." Even if a company has a low A.M. Best rating, they may still try to sell an insurance policy. There are, unfortunately, some companies that will take your money, even if they know they cannot offer you a reliable service.
Knowing what the A.M. Best rating for your insurance company is could save from a very bad investment. Insurance policies are supposed to protect you in the event of an accident, and if your insurance company has a poor A.M. Best rating, there is a high probability that it will not fully cover you the way it promised. There are many reliable insurance brokers that offer policies only from those companies with A.M. Best ratings in the A range, and these are the companies you want to deal with. In order to save yourself headache and heartache, look at a company's A.M. Best rating before investing in an insurance policy.
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