In today’s world, efficiency and speed are essential. As an agent, you should leverage and utilize the tools and resources available to help run your business and know where to look for these resources. Always start with OIA! Here are some additional links that are worth checking out.

Financial Planning & Ratings Agency Contact Information: A.M. Best, Fitch, Kroll Bond Rating Agency (KBRA), Moody’s, and Standard & Poor’s—rate the financial strength of insurance companies. Each has its rating scale, rating standards, population of rated companies, and distribution of companies across its scale. Each agency uses numbers or plusses and minuses to indicate minor variations in rating from another rating class.

The agencies disagree often enough, so you should consider a company’s rating from two or more agencies before judging whether to buy or keep a policy from that company. Moreover, agencies will announce changes in ratings on any day. It’s prudent to check annually on the ratings of any company you’re interested in. Some points for using the ratings:

1. Companies are likely to highlight a higher rating from one agency and ignore a lower one from another or select the most favorable comments from a rating agency’s report.
2. To use the ratings from multiple independent agencies, you must understand that each agency’s rating code differs. For example, an A+ from A.M. Best is the next-to-top rating of its 15 categories, but an A+ from Fitch, Kroll, or S&P is their 5th-highest rating (out of 24 categories for Fitch, 22 categories for Kroll, and out of 19 categories for S&P). Moreover, Moody’s doesn’t have an A+ rating.

However, the ratings can be classified into “secure” and “vulnerable” mega-categories. Contact information for all rating agencies is listed below and can be found online or reached by phone. https://www.iii.org/article/how-to-assess-the-financial-strength-of-an-insurance-company

*To use these Web sites, you must register, but the service is free.

While A.M. Best Company’s rating of an insurer reports it was financially stable when it was reviewed, this does not guarantee future performance. 

A.M. Best’s Reasoning for Downgrades

“Downgrades were driven primarily by deteriorating operating performance stemming from severe weather-related events, fire losses, rising claims frequency, and supply chain issues, as well as declines in capitalization due to many of the same factors.”

Rating Drops

Let’s say you monitor your ratings in your agency according to your E&O guidelines. Your agency sees that your rating has dropped from a B to a B-.

What should you do? Check with your E&O carrier and verify the rating guidelines.

If you have additional questions, contact Ashley Riley, the Ohio Insurance Agents Association E&O Team Director of Risk Management, at ashleyr@ohioinsuranceagents.com or call 614-552-3052 or 800-555-1742.

Legal Disclaimer: This material is intended to provide you with general background and insight. The material does not constitute, and should not be regarded as, legal advice regarding any particular facts, circumstances, or issues. This material is not intended to serve as a substitute for legal counsel, and we advise you to contact legal counsel for specific analysis, drafting, and advice.

Cited Resource

Insurance Information Institute

https://www.iii.org/article/how-to-assess-the-financial-strength-of-an-insurance-company

About the Author:

Jeannine Giesler, CISR, CPIA, and past President of the OIA Board of Directors, Foundation for the Advancement of Insurance Professionals, currently serves as Resource Center Advisor for the OIA. The purpose of the Resource Center is to contribute to building a comprehensive library of resource materials for our members. We pride ourselves on being the one-stop shop for all OIA members and work to solve every problem or situation you may come across.