Insurance Company Ratings: What AM Best Scores Really Mean
Decode insurance company financial strength ratings to choose the most stable carriers. Understanding these ratings could save you from financial disaster.
In This Guide:
What Are Insurance Company Ratings?
Financial Strength Ratings
Insurance company ratings measure an insurer's ability to pay claims and meet financial obligations to policyholders.
Insurance company ratings are independent assessments of an insurer's financial strength and ability to meet its obligations to policyholders. These ratings help consumers evaluate the stability and reliability of insurance companies before purchasing coverage.
Financial Analysis
Detailed review of financial statements, reserves, and capital adequacy
Performance Trends
Historical performance and future outlook assessment
Claims Paying Ability
Evaluation of ability to pay claims during various scenarios
The AM Best Rating Scale
AM Best is the most recognized rating agency for insurance companies. Here's how their rating system works:
Superior
Highest rating - exceptional financial strength and ability to meet obligations
Superior
Excellent financial strength with strong ability to meet obligations
Excellent
Strong financial strength and favorable ability to meet obligations
Good
Good financial strength but may be vulnerable to adverse conditions
Marginal to Poor
Weak financial strength - consider avoiding these insurers
Why Financial Strength Matters
Real Risk
Since 2008, over 500 insurance companies have failed, leaving policyholders with unpaid claims and cancelled coverage. Learn how to choose stable insurers in our financial strength rankings.
Claims Payment Security
- Higher-rated companies have better claim payment records
- More financial reserves to handle large disasters
- Less likely to delay or deny legitimate claims
Long-term Stability
- Coverage remains in force during economic downturns
- Stable premium pricing over time
- Consistent customer service and support
How to Check Your Insurer's Rating
Step-by-Step Process:
- 1Visit the AM Best website (ambest.com)
- 2Use the "Ratings & Criteria" search tool
- 3Enter your insurance company's name
- 4Review the current rating and any recent changes
Pro Tip
Check multiple rating agencies (AM Best, Standard & Poor's, Moody's) for a complete picture of financial strength.
Warning Signs to Avoid
Immediate Red Flags
- • Rating below B++
- • Recent rating downgrades
- • Under regulatory watch
- • Frequent management changes
Caution Signs
- • Negative rating outlook
- • Declining market share
- • High complaint ratios
- • Limited state licenses
Choosing the Right Carrier
Recommended Minimum Standards:
Life Insurance
Health Insurance
Property & Casualty
While ratings are crucial, they're not the only factor. Consider coverage options, customer service, premium costs, and claims handling reputation alongside financial strength ratings. Our advisory process helps you evaluate all these factors.
Need Help Choosing a Stable Insurer?
Get personalized recommendations from our licensed insurance broker
Zach Bradford
With over 8 years in insurance and financial services, Zach specializes in helping families choose stable, highly-rated insurance carriers. He's personally reviewed financial strength ratings for over 100 insurance companies. Explore our life insurance services.