Protecting Yourself in Difficult Times
- Make sure the company is licensed to sell insurance where you live by contacting your state insurance department. Insurance companies have to meet certain minimum legal standards to be licensed by state insurance departments. But having a license is no guarantee of financial stability.
- So do your own research. Financial strength ratings represent an analysis of a wide variety of risks that could affect an insurer’s long-term survival. You can check the financial stability and soundness of insurance companies at these sites:
A.M. Best Ratings
Standard & Poor’s
Duff & Phelps
Moody’s Investor Service
- Ratings don’t provide information on cost, customer service or satisfaction or the quality of an individual policy.
- Make sure you get the most recent rating available because the condition of a company can change.
- Not all licensed insurance companies choose to be evaluated by all of the rating services. So some companies may not have ratings from every agency.
- Comparing ratings from different rating services can be tricky. Each rating agency has its own rating scale, and the agency may change its scale or the symbols and descriptions it uses. For example, an A+ from A.M. Best is the next-to-top rating, but Moody’s doesn’t have an A+ rating.
- Call the insurance company’s customer service line and ask for all of the company’s ratings from all of the ratings services. If the company hedges or provides misinformation, think twice about dealing with it.
- If it’s truthful, then ask for copies of the ratings reports. Get the full report-not just the quotes the company wants to highlight. You’ll get more information in them than you can through the rating service websites, which generally just give you a grade.
- Many insurance companies market their products under a brand or marketing name. Be sure you know the names of the underwriting companies that market under that brand name when looking up a company’s ratings. For example, AIG markets life insurance in the United States under the marketing name “AIG American General,” but several companies underwrite products under that name, including American General Life Insurance Company and AIG Life Insurance Company.
- If you’re dealing with an insurance agent, ask him to provide ratings on the recommended companies as well as copies of the reports. The agent should also be able to explain the information in easily understood language.
Tags: Consumers and Contacts · Insurance · Money