Do you know if your insurer is rated? Barry James, director of Osborne and Sons Insurance Consultants, explains who rates insurance companies and how the rating systems works...
If you are not an expert in the insurance world then you may not know that insurance companies/brokers can actually be rated. Whilst you cannot base your final insurance choice solely on this rating it is very important to know if your insurance company is rated so you have extra peace of mind. It is always best before you choose your insurance policy with an insurer that you do your research so you can be fully informed when you make your final choice.
Who rates insurers?
Insurance companies and insurance brokers will be rated by one of three companies: Fitch, Moody’s and Standard & Poor’s. These companies are known as the ‘big three credit rating agencies’ and they are nationally recognised as the statistical rating organisations (NRSRO).
The rating I will be focusing on is the one handed out by Standard & Poor’s. Standard & Poor's is a business intelligence corporation and they provide credit ratings on bonds, countries and other investments. The Standard & Poor’s rating is a credit score that will reflect a company’s creditworthiness, to break it down it will give you an indicator about how likely a debt will be repaid. It should be taken into account that whilst having a rating can give you a gage about a company, it should not be taken as a definite as these ratings are for information purposes only.
How are insurers rated?
All of the credit rating agencies will grade in a very similar way. Standard & Poor’s will rate a company based on their annual reports, press releases and news articles. The Standard & Poor’s analysts will also take into account the company’s financial condition and performance. The analysts will then form a view about the businesses risk management strategies.
After undergoing a study a company will then be rated with a letter grade. Standard & Poor’s have a very in-depth rating system with ‘AAA’ being the highest ranking you can achieve. The worst score is a ‘D’, which means a company could already be in default of a claim. The rating system also includes pluses or minuses to help indicate what grade has been achieved.
Confused? Talk to the team at Osborne and Sons!
Confused? Don’t worry. As a specialist in Commercial insurance I understand that insurance is a minefield. I can only advise that you should be aware that an insurance company can have a rating. If a company doesn’t have a rating this doesn’t necessarily mean you shouldn’t use them, they may simply not want to spend the money on getting rated at it can be quite pricey but we feel it is just important for you to do your research.
Still confused? Talk to me directly. At Osborne and Sons, myself and the team, want to make sure you have the right cover to fit your business and I can sit down with you and go through your commercial insurance needs. We believe our value is in the quality, service, and advice you get when working with Osborne and Sons. Also remember the cheapest insurance is not always the best. Often if you choose the cheapest insurance you will have to buy it twice.
Call me on 020 83886068
Or email me at Barry@os-ins.co.uk
Member since: 10th July 2012
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