Weiss Insurer Ratings

For my first 20 years in the insurance business I used AM Best Ratings when I presented an insurance program to my clients.  My objective was to give my clients reassurance as to the financial strength of their insurer. Everyone uses Best Ratings.  Why shouldn’t I?

Early into my career an insurer called Transit Casualty went bust.  It had a Best Rating of A until about 2 weeks before it went under.  That planted the seeds of doubt in my mind.

As I started building my consulting practice on the idea of unbiased advice I found that AM Best was not unbiased.  Perhaps I’m a slow learner…

I started to hear stories of insurers pulling their rating from Best.  I heard of fees paid to Best by insurance companies.  I also figured out that something like 92% of insurance companies have a Best Rating of A- or better.

I was not the best student in statistics.  However, even I know that in a group of many thousands of units there is absolutely no way that 92% of them are “excellent.”

I have been using Weiss Ratings ever since.  I have often described Weiss as the tough grading Professor many of us had in college – you were glad to get out of the class with a C.

I do not claim that Weiss is perfect.  There are parts of their rating system that does not make sense to me (Example: Travelers Insurance subsidiary insurers have at least 4 different Weiss Ratings, from A to C).  However, they are, by all accounts unbiased.  They get their rating info from regulators.  They do not ask insurer permission to publish their analysis.  They seem to be independent.

I just learned of a new service offered by Weiss, Weiss Watchdog – http://www.weisswatchdog.com/.

Go to the site.  Signup.  You can then enter a list of ten insurance companies that you want to watch.  If the insurer rating is changed, you get a notice.  Put in your business insurer’s name, your life insurer, your disability carrier, and your home insurance company.  If things start to go south, you get a notice and can decide how to react.

I remember even now what it was like moving clients to new insurers after Transit Casualty went under (it was 1985).  I would not wish that on anyone.  Check out your insurer and use Weiss to keep track.