How are auto insurance companies rated?

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Things to Remember...
  • All insurance providers y have an assortment of insurance packages, confident coverage of a vehicle requires viewing a company’s services and customer support
  • Insurance companies ensure an auto insurance company is meeting on its promise of good customer service, ability to pay claims, and offer the opportunity for both consumer and industry to examine dynamics that shape the relationship
  • While there is a number of other nationally recognized statistical rating organizations in the auto insurance industry, the most well known are Standard & Poor’s, Moody’s, A.M. Best and Fitch Ratings

It’s not easy to pick a reliable auto insurance company. As of 2010, New York had 176 licensed auto insurers; Florida, 159; Arizona, 172. While Massachusetts bottomed out at 23, Illinois topped the list with 196.

Attempting to narrow the best individual car insurance services available, let alone the best, is finding the needle in the proverbial haystack. The choice is, without question, a fundamental economic decision.

While all insurance providers may have an assortment of insurance packages to suit consumer needs, confident coverage of a vehicle requires viewing a company’s services and customer support.

  • How efficiently do they solve problems?
  • How fair are they at dealing with claims?
  • Do they have the stability to protect you and your family?
  • Why is this coverage of higher cost than the one a friend is paying for?

Anyone looking for auto insurance is also looking for the peace of mind that comes with being associated with a superior company and, let’s face it, customer care is what separates a strong insurer from the pack.

  • A consumer can and should perform their due diligence:
  • Review personal needs
  • Visit the state department’s insurance web site
  • Confer with local body shops and trusted mechanics
  • Compare the varying strengths and weaknesses of the companies
  • Check with the Better Business Bureau
  • Speak with a reputable, independent agent
  • Evaluate pricing and policies
  • Ask friends and colleagues for company referrals

At the end of such detailed investigation, there may still be a list compiled of more than a dozen possibilities. Even reviewing decision makers like a decent balance between coverage, reputation and cost can leave a pile of formidable choices.

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Look for the Ratings

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Highly regarded car insurance carriers are rated and reviewed.

The auto insurance industry is scrutinized by any number of global marketing information companies. These firms conduct surveys and studies of insurers large and small.

Though criteria of all kinds are used, a major factor in their research is customer satisfaction. Buyer behavior, after all, will always be the last resort in determining an individual company’s success.

Products and services of these insurance companies, and how consumers feel about them, is how rating firms establish the strength of a trustworthy car insurance company.

The idea is to offer patrons the ability to and assurance of finding an auto insurance company that is prepared to meet and excel beyond a client’s expectations.

Outside of customer satisfaction, the ratings also act as a watchdog for the industry. A solid insurer is, undoubtedly, a sold insurer.

Yet, as in any competitive business, nothing is more motivating than being watched and reviewed on one’s performance.

No individual or entity may particularly like them, feeling both defensive and threatened, but there is no fighting the idea that the process offers constructive feedback and allows the opportunity to improve or, at the very least, stand amid the opposition.

These ratings compel insurers to look at the strength and weak points, including those of the competition.

With these ratings in mind, they could decide to put into practice more effective procedures and tools to better understand the wants, needs, and expectations of their clientele.

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Looking at the Ratings

Measuring any company’s strength can be an arbitrary task. Each rating firm has its own rating system. Each has its unique criteria for coming to its conclusions.

But ideally, they all strive to do the same thing: ensure an auto insurance company is meeting on its promise of good customer service, ability to pay claims, and offer the opportunity for both consumer and industry to examine dynamics that shape the relationship.

While there is a number of other nationally recognized statistical rating organizations (“NRSRO”), in the auto insurance industry, the most well known are Standard & Poor’s, Moody’s, A.M. Best and Fitch Ratings.

Their annual and quarterly statements are reviewed throughout the industry.

They provide insights into what drives customer satisfaction and sound business practice.

While it is not unusual for an NRSRO to release a list of ‘best’ or ‘strongest’ auto insurance companies, an NRSRO normally uses a grading system to show where any given company stands among its peers.

Looking at and averaging a number of factors, an insurer can, depending on the NRSRO, be rated highly with an AAA or A++, and, as quality of service falls, could get recognized with a grade low as a D.

Depending on the NRSRO, in between the higher and lower grades, there can be anything from ‘BB+’ to ‘CCC’.

There are also ratings for ‘E’ (under regulatory supervision), ‘F’ (in liquidation) and ‘S’ (rating suspended). These last three, of course, are definite signs of a company that may not deserve business.

Overall, all firms use the following general goals to help gauge a company’s capacity to meet its commitment to policyholders:

  • Overall satisfaction
  • Customer support (answering questions; speed at resolving claims, etc.)
  • Policy offering
  • Billing and payment
  • Pricing

After this, the specifics can differ:

  • Online claims handling
  • Hours of operation
  • Availability
  • Customer complaints
  • Years in business

The ratings will also take into account Key Performance Indicators (KPIs). KPIs are business practices that positively influence customer satisfaction.

These benefits are always reflected in the surveys that firms offer on a constant and unbiased basis. The information is invaluable input to insurers.

The prioritization of corporate strategies that have impact on satisfaction must be key, and, with the results of these surveys, reviewed regularly by the insurance companies.

Stability

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There is one final, important thing that every rating system takes into consideration, the one aspect of an insurer that no consumer should ever overlook.

That is financial stability. If an auto insurance company does not have an unyielding financial foundation, its ability to pay out claims in a timely manner, if at all, is suspect.

Without financial stability, a company cannot be expected to:

  • Deliver on customer expectation
  • Improve product
  • Increase efficiency
  • Deliver convenient, flexible service
  • Offer the most affordable rates

It’s Your Choice

Ratings cannot and never will predict the future or unforeseen developments. They are indicators of strength and worthiness. There must always be due diligence on the part of the consumer.

Research and query any available resource, including the rating system described here.

If the ratings are used as such, as opposed to guarantees of quality, they will help a consumer avoid any specific dissatisfaction with an auto insurance company.

An auto insurance rating is a tool to complement shopping for an insurance company, not replace it.

Find out how AM best auto insurance ratings work and how to find top rated cheap auto insurance with our FREE comparison tool!

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