You count on insurance to be there when you need it. In some
cases, you buy insurance hoping you’ll never need to use it. So when you do
need your insurance company to pay a claim, the last thing you want to hear is
the insurance company doesn’t have the money to cover what you bought insurance
for in the first place.
Insurance policies are often bought from large,
well-established companies that have been around for a long time. You see their
ads on TV, their billboards along the highway, and may have been with them for
many years. Thus, you may assume these companies are on sound financial
footing, and in most cases this is correct.
One of the good things about Pennsylvania is that for many
types of insurance, the market is competitive. Having many insurers providing
coverage is good in that you have many options from which to choose, to try and
find the coverage that is best for you. Competition in insurance, as in most
areas, also helps keep prices more affordable.
However, when the market is attractive, as Pennsylvania’s is
in many areas of insurance, companies want to be part of that market. Having
many insurers offer policies likely means you may receive information from
companies with which you are not familiar. As companies work to gain more of a
share in a given market, some may offer lower premiums or other financial
incentives to get you to buy your insurance with them.
In general, these are good business practices and help keep
the prices you pay for various types of insurance lower. However, you do need
to make sure a company, especially one with which you aren’t familiar, is not
offering such low premiums or other customer incentives as to weaken the
ability of the company to pay the claims of its policyholders.
Checking the financial stability of an insurance company may
be something you have never thought of doing. So, how would you go about this?
There are firms which provide independent analysis of and information on
insurance companies’ financial conditions. This is a good place to start. Among
the firms which specialize in providing information on insurance company
finances are AM Best at www.ambest.com, Standard
and Poor’s at www.standardandpoors.com,
and Moody’s Investors Services at www.moodys.com.
You can always ask the insurer or agent directly for
information on their company’s finances, too.
You can also ask our Consumer Services Bureau about a company at www.insurance.pa.gov or call
1-877-881-6388. We can’t recommend any company but can help point you to where
you can get the best, unbiased information on an insurer’s financial stability.