An insurance company rating is an indicator as to the financial strength of an insurance company. In other words, an insurance rating is a rating company’s informed opinion of how likely it is a given company can pay its customers’ claims.
After all, you wouldn’t buy a policy from an insurance company that doesn’t have the financial stability to pay out a claim. No one wants to pay premiums for years, only for the insurance company to be deemed insolvent and unable to pay out.
Insurance ratings rate the possibility of that scenario. The better a company’s insurance rating, the more likely it will be able to meet its claims obligations.
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