What are the Levels for Insurance Ratings?
While each ratings agency has its own metrics, most use a grading system of A++ to F. Similar to a report card, a higher letter grade indicates that the insurer has a strong financial position and can payout on its policies. Moody’s, Fitch Ratings, and Standard & Poor all rate insurance companies, but AM Best is the traditional standard in the industry, because of its length of time rating insurers, objectivity, and specialty.
Source: The Direct Effect: Insurance Company Ratings Explained
If your insurer has a rating from A++ to B+, they fall within the secure category. There’s a high likelihood they can meet their insurance obligations. Companies with a B through C- are more vulnerable to changes in underwriting and economic conditions. And those with a D to E are likely to default, may be under significant regulatory supervision, and also might have been placed in liquidation.
When looking at insurance ratings, you also might see a numeric rating in the form of a Roman numeral. AM Best uses this rating to indicate the insurer’s financial size. They assign numbers from I (less than $1 million) to XV (more than $2 trillion). Minimally acceptable ratings will be shown as A-VII.