What are Insurance Ratings? Why are they important and what does it mean for you?
Insurance ratings are financial evaluations carried out by independent agencies. The purpose of the rating process is to identify financial strength and more importantly, the insurers’ ability to pay out on potential future claims made by policyholders. There are lots of independent insurance rating agencies in the marketplace. Some of the most well-known include Standard & Poor, Fitch and AM Best.
Lots of factors and criteria are taken into account when ratings are being considered. Some examples of these include:
Insurance policies written (high risk versus low risk)
Risk Management Systems
Competition in the sector and associated pressures
Ratio of Capital to risk
Claim statistics and claim history
Company age and history
Market positions of the company
Economic trends within the sector
These are just some examples and the criteria will vary depending on the rating agency.
Ratings are not guarantees. They are intended to offer an indication of financial strength and it is important to note that they can change.
WHY IS A RATING IMPORTANT?
Insurance Ratings let customers and consumers identify and compare insurers in a very easy, transparent way. Insurance customers need insurers who are reliable and will be there when they are needed most.
The higher the rating, the lower the risk. Working with an insurer with a good rating means they have the ability to remain solvent and pay out on potential future claims. Insurers with lower financial ratings may not be in such a strong position, if a large volume of claims arise. This can present a greater risk to consumers and policyholders.
An insurance company who is unrated indicates that no information and evidence has been reviewed into their financial footing and their ability to pay out on claims. Unrated insurers can present significant risk to policyholders, especially if they are located outside the UK where policyholders may not have the protection of UK regulations.
Financial institutions, banks and mortgage lenders realise the importance of “A” rated insurance and the added level of protection it offers. That’s why more and more house builders, property developers and housing associations are insisting that contractors work with an “A” Rated insurer for their 10 year structural warranty insurance.
At Global, we understand the importance of working with an “A” rated insurer. It provides peace of mind for our clients and helps to reduce their risk. We work closely with our clients often before ground is even broken or at planning stage. Getting involved as early as possible adds another level of quality control at every stage of the project. This can also help to minimise the cost of our “A” Rated premiums for our clients.
We work with house builders, property developers and housing associations throughout the UK to arrange “A” Rated, Structural Defect Insurance on new build residential construction projects, mixed use projects, commercial projects, local authority projects and housing association projects.
If you are planning your next UK construction project and would like to find out more about our “A” Rated cover, get in touch with the team at Global Home Warranties.
You’ll discover that it’s not just our insurance that is “A” Rated, our technical expertise and customer service is too! Click here.