Speak with an experienced advisor! - Moodys Insurance Rating and how to check.
- Don’t Buy Life Insurance without Checking the Company Rating
- All Term Life Policies may Sound Similar.
- Financial Differences do exist.
- What type of Financial Rating to Check with Moodys.
About Moodys Financial Rating Agency:
Moodys is considered one of the big three credit rating agencies in the United States, along with AM Best these four are the most well known credit rating agencies that cover Insurance and Reinsurance companies. AM Best is an insurance specialist rating agency.
Moodys is based in New York and employs several thousand people.
What type of Rating Should You Check with Moodys:
Unlike AM Best, Moodys rates companies other than Insurance Companies. Therefore they have many more types of ratings. With Moodys you will want to focus on their FSR rating. FSR stands for Financial Strength Rating. According to Moodys Research Document, Titled: Ratings, Symbols, and Definitions, Insurance Financial Strength Ratings are ” opinions of the ability of insurance companies to pay punctually senior policyholder claims and obligations and also reflect the expected financial loss suffered in the event of default. ” The document is dated December 2016.
FSR Ratings are distinct from other ratings that have more to do with either a specific debt obligation or overall company health. Although easily confused with other ratings, FSR ratings are germane to world of insurance consumers.
Confusingly, FSR ratings can also go by the term ISF ratings. Actually they are different blends of the same phrase: Insurer Financial Strength Rating. ISFR, ISF Rating, FSR…
That does not mean that consumers should ignore other types of ratings from credit rating agencies, it does mean, however, that the FSR rating should probably be the first one you check.
Moodys Financial Strength Rating Scale:
Moodys rates insures on a Scale from AAA, AA, A, BBB, BB, B, Caa, Ca, and C. They also can use modifiers of 1,2,3.
AAA is the highest, and C is the lowest Moodys Insurance Rating. The higher the rating the more appealing the insurance carrier.
How to Check Moodys Insurance Rating:
- Go to Moodys.com
- Go to the White Box in the upper right
- Type in the name of the insurer that you wish to check
- You will be asked to login or create an account
Much of Moodys Insurance Rating s are locked off to non paying members. Therefore often the best a consumer can often do is pull up a rating update or affirmation press release. However the Press Release should still contain the most important information: the IFS rating.
What to Do With a Financial Strength Rating:
It is advised that all consumers of insurance check the ISF rating of their insurers at least once a year. For personal and business use. Property, Casualty, and Life Insurance. Since people sign up for life insurance generally for much longer periods of time than for property insurance is may be more important. Admittedly many people may choose to stay with the same auto insurers for twenty years or more, they do have a choice to make at renewal each and every year. And this is not the case with Life Insurance. If you buy a twenty year term life insurance policy, than you will have the same insurer for essentially twenty years. If you buy a whole life or other cash value policy you should expect to do business with that life insurer for the rest of your natural life.
FSR Ratings for Life Insurers:
When buying life insurance it is imperative that you check the credit rating of your future life insurance company. In fact it is advised that you check the rating with multiple credit rating agencies. Whole, Term, Universal it really does not matter, all insurers should be checked and evaluated.
Look for not just the current rating, but the past rating history. If the FSR has gone down over time, that could mean something for you. Also if the rating has gone up recently that may tell you something different.
Other Considerations:
In conjunction with the IFS rating of the insurer, you will want to understand the life insurance form of formation. Is it a corporation, a mutual, or another form? How is it structured? Is there a master corporation with sub entities? If there are master and subs, you may want to consider check their Financial Strength Ratings as well in order to get the complete picture. You may want to ask your insurance agent about some of this information.
Whole vs Term Life IFS Ratings:
Should you check Moodys Insurance Rating for Term, Whole Life, or Both? With all forms of life insurance you should check the ratings. It does not really matter more for whole or term life insurance. Both should be checked, preferably with two different rating agencies. The argument that permanent life insurance is for your whole life while while term life policy is only for the life of the term is actually irrelevant in our opinion. Why? It ignores the statistical information concerning how long people are likely to keep life insurance. Just because you purchase a whole life insurance policy does not mean that you will likely keep that insurance policy forever. Whole life does not equal whole life for all people. Term life insurance is similar in this as well. Not all people that buy ten year contracts keep them for ten years.
Best Practices for Checking Moodys Insurance Ratings:
- Always just check with One Rating Agency at a Time.
- Check the Master and Sub Entities
- Only rely on the FSR from Moodys. Not from Insurance Agencies Website or Paperwork.
- Understand the type of Insurance Company you are checking: Mutual, For Profit Business, Etc.
- After you have checked the rating with Moodys, Consider checking with another rating agency.
Help, I don’t Understand!
Do you have questions about Moodys Insurance Rating? Please feel free to contact us at 415-295-4555 or email us at sales@marindependent.com should you have any questions. We are here to help. Please read our disclaimer. Please consult a licensed insurance agent in all situations when evaluating any form of insurance.
