Are insurance ratings effective?

Effectiveness of Insurance Ratings
Choosing the right insurance company is usually an important financial decision - whether for personal or business purposes. Before making a decision, an important consideration is the overall financial strength of an insurer. If an insurance company cannot pay for future claims or benefits, there is little point in paying for the insurance. That is precisely why insurance ratings came into effect. These ratings represent a thorough analysis of a wide variety of risks that could affect an insurer's long-term growth and survival. According to Insure.com, insurance companies can fail or cease to operate due to inadequate financial capabilities, competitive forces or changing fundamentals in their marketplaces. Standard & Poor is the world's foremost provider of these ratings. Make sure to do your research before selecting an insurance company. But keep in mind that higher ratings are not a warranty or a guarantee of an insurer's current or future ability to meet obligations to policyholders, nor are they a recommendation of a specific policy form, contract, rate or claim practice. So, are insurance ratings effective? Yes and no. Choose wisely!

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