Are You Using an A-Rated Insurance Carrier? Your Protection Could Depend on It
Article • 5 minutes
By Matic
We all know that an “A” rating equates to top quality, whether it’s related to a restaurant inspection or the paper you worked so hard on in history class. Turns out that this standard is the same for insurance — which is why you should always do business with an A-rated insurance company, as designated by two independent ratings agencies AM Best and Demotech.
Let’s find out more about where the rating comes from and why it matters.
What Are AM Best and Demotech Ratings?
While online reviews are a helpful way to source insight from fellow customers, nothing beats independent ratings bestowed on a company by an impartial agency, and that’s where the AM Best and Demotech insurance ratings come in.
As the world’s first credit rating agency, AM Best has impeccable experience in issuing independent reports to help consumers identify A-rated home insurance companies, A-rated auto insurance companies, and A-rated life insurance companies.
The agency uses a scale called “Best’s Credit Rating (BCR)” that rates both financial strength and issuer credit to give a forward-looking opinion on how they will perform. AM Best has issued ratings on more than 16,000 insurance companies globally.
Likewise, Demotech offers its own version of ratings, called Financial Stability Ratings® (FSRs), which uses a series of quantitative ratios and considerations that comprise its Financial Stability Analysis Model.
What Does It Mean To Be an A-Rated Insurance Company?
Looking to find the best home insurance or best auto insurance? That’s where AM Best and Demotech insurance ratings make a difference in helping consumers identify A-rated carriers that will provide the protection they seek, based on rigorous rating scales.
AM Best, for example, uses both qualitative and quantitative factors to delve into an insurance company’s business profile, balance sheet, and operating performance.
First it analyzes a host of information sources, including annual and quarterly financial statements, regulatory filings, business operating plans, and more. While some of the information is public, much of it is proprietary, which would make it challenging for a consumer to conduct a similar analysis — even if you wanted to.
Then to round out its detailed process, AM Best supplements this analysis with meetings and ongoing dialogue with the insurers themselves, ensuring that the rating encapsulates a wide range of inputs.
Demotech uses similar quantitative criteria, and is proud to be the first company to have its rating process formally reviewed and accepted by Fannie Mae, Freddie Mac, and the U.S. Department of Housing and Human Development (HUD).
The ratings agencies then issue their independent opinion on a carrier’s financial ability to pay its claims. The goal is to confirm that an insurer can meet its obligations in paying out claims as policyholders expect and deserve.
Why Does It Matter if a Carrier Is A-Rated?
The reason you invest so much time in the process of finding the best auto insurance or best home insurance is for the sole purpose of ensuring your goods and property will be adequately protected in case of an accident, weather event, or other catastrophe. And naturally, if you’ve paid your premiums and fulfilled the rest of the components of your insurance policy contract, you expect your insurer will pay your claim promptly and fully, should your circumstance meet the criteria of your policy.
That’s why the A rating, as designated by an agency like AM Best or Demotech, should be the first thing you look for as you research potential insurance companies. It means that the agency has assessed a given insurance carrier as one that is able to meet all its obligations to you — the policyholder — based on its financial strength and credit worthiness.
In other words, if you choose a company with a less-than-stellar rating, you can’t be assured they are equipped to pay your claim, which may leave you out in the cold (potentially literally!), despite the fact that you have faithfully paid your premiums and upheld your end of the contract.
As you can see, it matters a lot whether you are affiliated with an A-rated insurance carrier as your ability to be protected depends on it. In fact, that’s one more reason to turn to Matic, which does the research for you and partners with many A-rated insurance companies.
With a roster of 40+ A-rated insurance carriers to choose from, Matic is equipped to help you find the best policy for your unique needs. After all, you and your family deserve the peace of mind that comes with ensuring you have placed your trust with an A-rated insurance carrier that can fulfill its promises.
Want to know more about how Matic can help you find the best home insurance or auto insurance? Click here to start the process for home insurance or here for auto insurance.
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