How Safe Is Your Insurance Carrier?

The collapse of Penn Treaty and the government bailout of AIG changed that. Both events demonstrated that even large, well-known insurers can fail – and when they do, policyholders who are counting on benefits may find themselves without the coverage they paid for. Your insurer must be in business when you file a claim, which could be decades from now. 

Four major ratings companies evaluate insurance carriers and grade them on their financial strength. The easiest way to check your carrier’s rating is to ask your agent. If the agent won’t show you documentation, find a different agent. You can also look up carrier ratings directly on the Internet. 

Keep two things in mind. First, high ratings don’t guarantee financial health. AIG was top-rated only days before it went broke. Ratings are a useful indicator, not a guarantee. Second, don’t be concerned if an agent recommends a carrier you’ve never heard of. There are thousands of insurance companies in the United States, and the vast majority don’t advertise during sporting events or sponsor national campaigns. An unfamiliar name does not mean an unreliable company.