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Why Insurance Carrier Ratings Matter

Insurance carrier ratings matter- point, blank, period. From a legal standpoint, you are held accountable for taking insurance with a financially stable company. The stability of these insurance companies is conveniently provided by third party rating agencies that take it upon themselves to research a company thoroughly and give non-biased feedback.

A popular third-party insurance rating provider, AM Best, features the ability to search rated insurance providers and view relevant information so that you can pick a provider that most accurately fits your needs.  AM Best was founded in 1899 and continues to serve the insurance community as one of the most prominent rating providers out there.  Based on a rating scale of A+ to F, they evaluate insurers based on financial strength, creditworthiness, and the ability to meet policyholder or security holder obligations. For more information on what AM Best can do, visit www.ambest.com.

The higher the AM Best rating, the more implied reliability of the insurance company incurs in an effort to avoid future tribulations.  That being said, the insured should take precaution on the flow rate of premiums in the insurance company they choose to use. This can be affected by premiums charged as well as the number of people insured by the firm. These factors make it abundantly clear that it is a continuous cycle between premiums, ratings, and insured preference.

Insurance carrier ratings also help in giving a person closure and the confidence to choose a company they feel most comfortable with. It is quite hard for a customer to know how a company performs on their own, therefore, relying on rating providers (like AM Best) assist in making the best possible choice.  The research provided on any desired insurance company gives a plethora of information allowing the potential insured to make an informed decision rather than choosing blindly or from a non-credible source.

Many organizations and local governments create a certificate of insurance rating threshold before considering employing services.  This helps in finding the proper vendor for an organization. For example, if an organization creates a ‘C rating’ minimum, you are likely to be denied if your insurance company is given a ‘D’ rating. As stated, the higher the company is rated, the better the services are given, thus creating less risk.  It is, therefore, professionally advised to make sure that the insurers one uses for coverage are either A, B, or C rated companies.  Insurers will, as a result of this, strive to have a high rating to bring in more viable vendors utilizing their insurance packages.

As an organization or government, creating thresholds are beneficial towards reducing insurance claims risks, however, cumbersome to enforce. Managing certificates of insurance as a whole becomes a time-consuming task. The components that need to be maintained are things such as expiration dates, the validity of an insurance company, insurance company ratings, and correct information provided on the COI. Any error from these areas can potentially make the certificate of insurance null and void which- detrimental to any organization.

Luckily there are programs created in order to remove human error and the components necessary to up-keep a certificate of insurance’s validity. CTrax is your all-in-one certificate of insurance tracking solution with the added bonus of having AM Best ratings within the software itself.  CTrax, a cloud-based solution, can maintain average standards as well as build automated thresholds for any your organizational needs.

See it for yourself, try Ctrax for for free.

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