Why Ratings Are Important When Choosing an Insurance Company

Ratings can help you decide between competing and competitive health plans. Many believe that the best way to be sure that you get the right health coverage for your needs is to compare the ratings of several different insurance companies.

The individual company's competitive forces, changing fundamentals and financial strength are all taken into account when they are compared through the use of health insurance ratings. This is imperative because if the health insurance company will no longer be able to pay out future benefits or claims then naturally any other considerations become completely unimportant. These various ratings are available online and there are several different ways of computing these ratings, using companies such as Standard and Poor's Insurer Financial Health Strength Rating, Credit Watch and Fitch Ratings Insurer Financial Strength Rating. These company's ratings offer you their opinions on the health insurance company's financial strength and what the potential is for them being able to meet the obligations that it has to their policy holders in a timely manner. These health insurance ratings do not take into consideration how willing the insurance company is to pay out on their obligations nor does it rate the quality of how well they service the handling of claims.

Ratings are normally done on a scale of "Triple-A" to "CC"; the insurance companies that have the notations "NR" have not yet been rated. Naturally, the health insurance companies that have the "Triple-A" rating are considered to have very strong financial stability characteristics and of course, those with the "CC" rating are believed to have weak or poor financial stability characteristics. Those companies with health insurance ratings of "BBB+" or higher are still considered secure, while those that have "BB+" or even lower are considered to be vulnerable.

The plus or minus sign (+, -) that may follow the ratings in the "AA" to "CCC" categories show what the relative standing is within the major categories that are rated. There are times when some companies will have health insurance ratings of "DDD" and it is normally used to designate that the company has either been given some kind of regulatory intervention or that they may have failed to pay out benefits in a timely manner.

You should keep in mind that these health insurance ratings do no take into consideration any kind of cancellation or surrender penalties, the likelihood of whether or not fraud may be used in order to deny any claims or the amount of the deductibles. Other things not taken into consideration are what the possible potential would be of certain foreign exchange restrictions possibly preventing or delaying any financial responsibilities being met.

Any of these ratings can be suspended, withdrawn or changed due to the change in the information that is provided by the health insurance companies; so be sure that you check the ratings that were done at different times.

Click here to learn about Health Insurance Ratings and how to make Health Insurance Comparisons.