Insurence

By: EconomyWatch   Date: 14 September 2009

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EconomyWatch

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Buying an insurance policy is an important decision, which can have far-reaching consequences. While most people focus considerably on the rates when selecting an insurance policy provider, there are several other aspects that must be kept in mind before making the final decision.

Things to Consider While Selecting an Insurence Company

The following points must be considered during the selection process:

  • Ratings: The ratings of an insurance company is determined by its financial strength, credibility and profits and the performance of its stock, among other critical factors such as mergers of acquisitions. Generally all insurance companies are rated by at least the top five rating agencies, AM Best, Standard & Poor's, Fitch, Moody's and Weiss. Since these agencies have their own individual system of rating, the ratings of the same provider might differ across the agencies. Therefore, check the ratings of an insurance company from a minimum of two agencies to get an idea of the financial strength of the provider.

  • Credibility: Check the credibility of the insurance company through state departments that regulate these companies. Also verify the company's license and other certifications.

  • Product: The selection of an insurance company should be based not only on its reputation but also on the variety of its products, policies and features offered. Additionally, the product should suit your needs and requirements.

  • Market ethics: The Insurance Marketplace Standards Association (IMSA) is a non-profit organization that promotes ethical conduct in life insurance marketing. Check if the insurance company you are selecting subscribes to these principles and codes of conduct.

  • Claims: Check the national claims database to verify whether there is any complaint information available for a particular company. This database can be accessed by all consumers. You can also ask your state insurance department to know the ratio of complaints available for policies sold by an insurance company. Also check the quality of claims in terms of how fast they have been settled. This will indicate whether the company has sufficient resources to settle claims.

  • Premiums: All insurance companies use different formulas to calculate the premiums for various policies and products. Check the policy premiums available at multiple companies and compare them. Choose the provider with a solid financial background and providing insurance at competitive prices.


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