How do you analyze an insurance company?

Update:

The question relates to determining the financial strength of a company and where to get information. I like the suggestions re www.finysis.net and A.M. Best. The first looks good since it allows me to do my own analysis of an insurer.

Comments

  • www.finysis.net provides excellent e-books and Excel-based software in this respect, which is really competitively-priced and of professional quality in my opinion.

    A.M. Best provides some good ratings material, but it can be expensive and is specifically designed for business use.

  • A good (but not always accurate guide) is to use AM Best or Standard & Poor (but remember that until a few weeks before the crash they were both giving Independent solid ratings).

    I would look at how much cover they have i.e. assets/ claims and loss ratios i.e. how much do they pay out per money taken.

    Then you have to look at the overall shareholders funds (assets Vs Liabilities) and also what they specialise in - for instance property insurance is much more steady than liability insurance.

    Some factors you won't find easy to discover i.e. level of re-insurance - which can make a difference as it protects them from large claims - and also whether they are a subsidiary of another insurer - some small insurers are backed by larger insurers - which gives them far greater stability than you might think at first glance.

  • Analyze them for what?

    Addition: Thank you for the extra information. Yes, you can use A.M. Best or Standard & Poors to evaluate an insurance company's financial strength. You will also want to investigate their claims paying procedures.

  • Check out VitalSigns by Ebix. They compile information on companies from various sources. My favorite way to describe the financial strength of a company is their Comdex rating which is a numeric average of AM Best, Moodys, S&P, etc. They will also supply you with a company snapshot on one page (debts, credits, profit, average investment returns, allocations and so on). Or more detailed information if you want it.

    If you are a broker or agent, this may be available for free through your upline, otherwise, I think there is a nominal fee.

  • Get the e-books and Excel-based software at www.finysis.net. The ratings agencies' analysis costs too much. Finysis.net's products, which are inexpensive, teach you how to analyze insurers yourself, and their software is excellent in producing relevant ratios, models and projections. The ratings agencies are selective in those insurers covered by their analysis, but if you have the knowledge and tools which Finysis.net provides, you can analyze ANY insurer well.

  • Figure out what you actually want in terms of insurance, what type of cover, what type of service, etc. and then ask questions and confirm the important answers by reading policy documents, etc.

  • By its past performance.Its reserves with the Government.Total number of cases done in a particular period.Total number of claims paid.Who are its fund managers in case of ULIP(unit linked plans)etc.

  • start with word of mouth ask around everyone you know they go to the one of your choice and ask how long it takes them to file a claim?

  • good company background.. financially stable

  • By whether they pay up or not when you have a claim.

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