The United States is a very important nation. It is the strongest nation in the world, and is a model of economic efficiency and social responsibility. One would have to go all the way back to the Great Depression to find a time when the strength of the U.S. economy was questioned as it stood in 2021. It must be noted that the U.S., as well as the rest of the developed world, has been experiencing a large amount of negative economic factors recently. All the more reason for the need for appropriate and adequate liability insurance protection.
According to the Financial Stability Report of the World Bank, released in May 2021, the financial rating of the united states liability insurance company is an "A+". That is an "A" with a "B" for balanced scorecards. This indicates the insurance company has a high degree of capital strength. The financial rating is expressed as a percentage over the total value of assets, liabilities, income and surplus.
The rating system by the FDIC is a complex process involving millions of documents and millions of transactions. A very complex business insurance products like U.S. Liability Insurance is a part of the overall rating system. That is why most small businesses are advised to seek professional assistance to ensure the coverage they need is right for their needs.
As one can surmise, there are many different types of liability insurance available to small businesses today. It may be difficult to determine what product or coverage level is right for a specific situation. The FICO credit scoring system is a great tool for assisting a business to assess its needs and choose the best product and service available. Small businesses should be aware that low FICO ratings have been linked to several different types of risk. If a business is able to increase its FICO score, it could improve its chances of obtaining credit, finding jobs, and obtaining necessary and beneficial financing.
When evaluating United States liability insurance company ratings, several factors should be considered. These factors should include a company's age and experience, rating stability, geographic location, policyholder exposure, premium payments and claims history. Companies that are older and/or more experienced typically receive higher ratings. Geographically located businesses are likely to be closer to the customer and receive a better rating because of their ability to perform in the area of service delivery. Policyholder exposure refers to the number of customers, a business has and their credit ratings.
When evaluating United States liability commercial insurance products companies should also consider underwriting criteria. Underwriting criteria consists of age of principal insured, the ratios of business insurance products to the total number of business claims filed during calendar year, and the ratio of business claims per beneficiary. A high ratio of claims may indicate that the insurer underwriters have difficulty finding claims and awarding excessive payouts. Also underwriting criteria such as age of principal insured and ratio of business claims to beneficiaries is used to establish a base rating. A base rating allows an underwriter to establish maximum premiums based on historical ratings of each product type.
The last factor used in rating a united states liability insurance company is financial rating or a combination of financial rating and underwriting criteria. Financial ratings can be improved by reducing the ratio of new claims filed, adjusting the cost of claims, increasing the length of time for which claims are paid, and decreasing the cost of settlements. There are two distinct ways to evaluate financial ratings. One method is to use the ratios of actual claims to expected claims over a given period of time. Another method is to use the historical performance of the company against its peers.
Please view my blog for a discussion of the topic of rating a liability insurance company. My future articles will discuss rating companies from a different perspective, using market information rather than company information to evaluate them. Please feel free to reprint or republish this article. The only requirement is that the links are live links.