How to choose a reliable Insurance Company

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It is never an easy task to choose a reliable partner, especially when it comes to a partner who supposes to have your back in most extreme life situations – Insurance Company.

Every company promises to give you the most reliable protection and it’s really easy to get lost in tons of nicely sounding commercial. Even experienced customers can face dishonesty from the side of their Insurer as the Insurer always cares about his interest first and about your interest after.

In fact, it is a direct interest of an Insurance Company to have legal reasons to not to pay you Insurance compensation (a money benefit) in a case something has happened to you (even if that was in a coverage list).

There are even certain forums and online resources where people leave their comments and warnings about Insurance Companies we should better avoid.

Here is how to check up and recognize an honest and reliable Insurance Company

First of all, there are official quality ratings provided by national rating agencies. Pick the top companies.

Insurance Company

If you have already chosen an Insurance company but haven’t signed a deal and want to make sure whether this particular Insurer is trustworthy and hones, pay attention to the following aspects:

  • make sure you can speak to a “live” person via phone or personally, not only through online chat of a customer support;
  • find out whether the Insurer specializes in the field of Insurance you are interested in. The thing is many Insurance Companies provide a standard package of services and have no experience in specific types of Insurance and still, they offer their client a deal being, in fact, unable to evaluate risks properly;
  • trustworthy and large Insurance companies always offer a good discount on family policies (when a person buys several policies at once. If the Company is too greedy for a discount, it says about the lack of funds (which is a bad sign).

And the most important thing: ask the Company for a record of claims refusal and study it thoroughly. Find out about every case the Company refused to pay compensation to a policyholder. If you see that Company use somewhat weird and poorly based reasons to decline the client’s claim – you better avoid this Insurer.

Tips for choosing an excellent Insurance Company

  • The size of a Company does not guarantee the Company will stick to their promises and declarations, as the bigger the Company the more experienced and sophisticated lawyers it has. If your case gives them even the tiniest chance to escape payments, they will definitely find the way to pay you zero.
  • Ask an independent lawyer for advice and show him the documents.

choosing an excellent Insurance Company

  • Compare deductibles and premiums whether they compete with the numbers of the A++ Companies (according to Moody’s rating).
  • If an insurance agent starts advertising you additional policies you obviously don’t need – it’s clearly a warning sign to keep away from the Company.
  • Always pick a Company that provides you with a clear, full disclosure services, rather than making on uncertain statements about “commercial secrets” and so on.

It is important to do the most thorough research in order to find out about all facts, complains and references about the Insurance Company you are interested in.

What if the Company is not big and well-known?

Businessman

Very often small Insurance Companies offer much more attractive terms of policies, so it may be a reasonable decision to choose a local Insurer. On the other hand, the risk that this Company will not be capable to stick to their promises is greater as well.  It is always the direct correlation between the size of the Company and its financial capability.

The things you should find out about the small Insurance Company:

  • The license that is issued by the official authority;
  • The country of the Company’s main office registration. If the legal address of the Company is in another country or in a country that belongs to an offshore pool, it should put you on the alert.
  • The period of time this Company is on the market. Beware companies that are younger than 5 years.

Evaluating financial reliability of the Company

How to understand if the Company is financially potent enough to satisfy the claims of clients when the sums of benefits are greater than typical auto accident payments? What if one really big Insurance case will throw the Company out of its stride, so your policy will become under the risk? How to know that your premium payments will eventually pay off when it comes to long-term policies like Life Insurance or Home Insurance?

financial reliability

First of all, you should gain some knowledge on how to evaluate financial credibility and stability of the particular Insurer. Here is the list of specific financial criteria you should be able to “read” and understand.

  1. Financial stability is the capability of the Insurer to match the liabilities towards policyholders if the economic situation will turn unfavorable and unpredictable.
  2. The registered capital of the Company must exceed the minimum required by the Law significantly. If the registered capital equals the required minimum – it’s not the good sign of the financial strength of the Insurer.
  3. The list of assets of the Company says a lot about its financial potency. This list must be available for public on demand, so if you see the increment of assets over years – that is an indication the Company is stable and will withstand any client’s claims, even the large onesassets
  4. The Insurance Portfolio of the Company must align with the size of its financial assets. If the number of insurance contracts exceeds the financial capacity, chances are the Insurer will go bust sooner or later.
  5. Actuarial reserves are the key element of the overall Company’s evaluation. The reserves must surpass the inflation rate. Exactly the actuarial reserves of the Insurer are purposed for making payments to policyholders, so pay the closes attention to this index.
  6. Reinsurance factor. Every Company has a pool of so-called “the largest risks” – the contracts with the biggest coverage. In order to keep the financial stability in all possible circumstances, Insurance Companies transfer the biggest risks to other Insurers. Your task is to find out who are the reinsurers of the Company you are going to buy the policy at. Evaluate the credibility and trustworthiness of those companies as well.

Insurance

These are the real, objective factors that describe the financial situation of Insurance Company on the dry “language of numbers”. Still, references of your friends, colleagues and all real people who are/were the clients of that Company are also important and may tell you much more than an AD brochure.  There are specialized national forums and online sites where real people discuss the quality of companies’ services.

The factors that must put you on the alert about the Insurance Company:

  • People (real clients or former clients) complain the Company pays less coverage that it was agreed in the contract.
  • Clients put a lot of negative comments related to terms of insurance payments from the side of the Company. The Insurer may delay the payments explaining it by “legal investigation” of the policyholder’s case, but usually, it is just a disguise for an unwillingness to pay money to a policyholder.
  • The last but not the list is the Company’s policy about bonuses and loyalty programs. Reliable and financial capable Insurers inspire regular customers to stay with the Company by providing them with valuable bonuses and beneficial options.

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