Choosing an insurance company is never easy. Whether you are looking to cover your health, car, home, or some other beloved item, chances are it's something you value very much (or per legal mandate), and so the stakes are high. Add to this pressure the pages and pages of complex language and novel terms and clauses in most contracts, and you may need a little help.
Insurance ratings organizations can give you an unbiased look at how an insurance company is performing along with its key strengths and weaknesses. Weiss Ratings is a well-respected rating organization within the insurance industry.
Key Takeaways
- Weiss Ratings is a well-respected rating organization within the insurance industry.
- Insurance companies with strong financial ratings have a low chance of failure, meaning that you can feel safe buying an insurance policy.
- Weiss has given financial strength ratings to over 16,000 insurers, banks, and credit unions; ratings range from A (“Excellent”) to E (“Very Weak).
- Weiss Ratings issues financial strength ratings based on factors like capital, asset quality, and profitability & liquidity.
Why Ratings Matter
When shopping for insurance, most people don't think about the business end of a company. They are concerned with their policy, the coverage, and the price they'll pay. But if you ever need to file a claim, and the time comes time to cash in, you'll expect that the insurance company can holdup their end of the bargain.
Companies with high strength ratings can stand up well against dips in the economy and any changes that may occur in the market for insurance as a result. It is important to choose an insurance company that can take care of all its debts and pays claims promptly. Companies with strong financial ratings have a low chance of failure, meaning that you can feel safe buying an insurance policy. However, if you find your company has a low rating, you may want to think about moving to a more financially sound company with a better rating.
Weiss Company History
Weiss Ratings is part of Weiss Group, LLC. The company has four subsidiaries: Weiss Research, Weiss Ratings, Weiss Capital Management, and the Weiss School. The research firm was founded in 1971 by Dr. Martin D. Weiss as a service to review and report on U.S. banks. In 1987, Weiss bought T.J. Holt & Company and began the rating business. During that year, Weiss also published ratings for more than 15,000 banks and savings and loan institutions.
Weiss ratings became the first insurance rating organization to issue independent financial strength ratings for life and health insurance companies. In 1993, Weiss also began publishing ratings for property and casualty insurance companies. The company was recognized by the U.S. Government Accountability Office (GAO) for its accuracy in issuing warnings when a company failed. They issued warnings against Mutual Benefit Life of New Jersey, Executive Life of California, Fidelity Bankers Life, Executive Life of New York, First Capital Life, as well as others. The Weiss Group sold Weiss Ratings to TheStreet.com in 2006. However, in 2010, TheStreet.com sold Weiss Ratings back to the Weiss Group.
Note
By nature, insurance presents many opportunities for fraud and scams, on both ends of the deal. Agents, brokers, adjusters, and investigators are in place to make sure people who file claims are playing by the rules; and the FTC is in charge of protecting stock holders and consumers against any unfair dealings or fraud that a company might engage in.
Weiss Ratings also issues ratings for credit unions, banks, mutual funds, ETFs, and stocks.
Weakest and Strongest Lists
Weiss aims to help consumers make smart insurance choices and get the best value on an insurance policy. They do this by breaking the contract and terms down into clear and simple terms. On such example is the list or weakest and strongest insurance companies that Weiss publishes. Companies rated weak have a “D+” or lower rating. These companies are believed to be financially vulnerable because of assets, liquidity, earnings, or other factors. On the other hand, the strongest list displays companies with a “B+” or better rating. Companies rated strong are believed to have a low chance of failure.
To be clear, the lists and ratings are not a sure bet. The strongest and weakest lists cannot fully predict or promise that the company you select will succeed or fail, but it is a good tool to help you see which companies have sound management in place and are on track to perform well financially. These factors can inform your choice of insurance company because you want them to be around when you need them (which may be far into the future), and you want them to be able to pay any claims you may have.
What Weiss Ratings Mean
Weiss has given financial strength ratings to over 16,000 insurers, banks, and credit unions using the rating scale below:
- A: Excellent
- B: Good
- C: Fair
- D: Weak
- E: Very Weak
- +: An extra “+” means that the rating is in the upper third percent of each grade range
- -: An extra “-“ means that a rating is in the lower third percent of each grade range
Note
It is worth noting that the Weiss rating system is mainly for people who deal in trading company stock. Along with each rating comes a recommendation about whether to buy or sell, and so for consumers, the ratings are like a sneak peek into a company's health in the market.
There are many factors that go into the financial rating of an insurance company. Weiss conducts very deep analyses with great attention to each detail. Here are a few of the factors that can have major impact on a financial strength rating:
- Capital
- Asset Quality
- Profitability & Liquidity
On the website, consumers are able to view any changes that are made to a rating, including any upgrades or downgrades, and why the rating changes were made.
The Bottom Line
Weiss ratings are a simple way for people who are in the market for insurance to compare and assess different companies. The rating system is reliable, comprehensive, and easy to understand. Its service is much like other rating organizations, such as A.M. Best, Fitch Ratings, and Standard and Poor’s. You can see what kind of financial standing your insurance company has and how it might perform.To get access to Weiss rating tools, you must sign up for a free account.
Note
To find out more about using Weiss Ratings, you can visit theWeiss Rating websiteor call 1-877-934-7778.
If you become a customer with Weiss, you can opt in to receive free tips about investing and other topics related to your finances. Once you subscribe, you will also receive the Weiss Ratings newsletter for free, which contains insights, analysis, and other special offers.
