There are several rating services that assess an insurance carrier’s financial strength and/or claims paying ability. The rating serves have their own proprietary formula to assign a letter rating based on the public domain information the carrier files with the state or their direct submissions to the rating services.
The most recognized rating services in the insurance industry are A.M. Best, Standard & Poor’s, Moody’s, Flitch and Weiss. The numerical Comdex Rating is a composite of some of these individual rating services and is usually a secondary assessment tool.
The ranking from best rating to worse uses letter ratings or multiple letter ratings with pluses or minuses of which three out of five services use 21 ranking levels. The disparity is often discovered in the comparisons between rating systems. The public at large thinks in terms of letter ratings in school, i.e. A being the best F the worst. But an “A” is not the best in any rating service. For example: An “A” rating is ranked second with Weiss, third with A.M. Best, sixth with Standard & Poor’s and Fitch. So clever advertisers may use Weiss over Standard & Poor’s in their advertisement campaigns and conversations with the public. But savvy consumers are more familiar with Standard & Poor’s as are their fiduciaries such as tax attorneys and CPAs.
It’s generally best practices to post all of them and their definitions for full disclosure and the appearance of objectivity.
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