Understanding Insurance Carrier Ratings: What AM Best, Moody's, and S&P Really Mean
- Ronelle Hunte-Roddy
- Apr 8
- 3 min read
When choosing an insurance company, most people focus on price and coverage. But there's another crucial factor you should consider before placing your trust (and your money) in any carrier: financial strength ratings. These ratings, issued by agencies like AM Best, Moody’s, and Standard & Poor’s (S&P), help assess an insurer’s ability to meet its ongoing policy and contract obligations.
In this blog, we’ll break down the big three rating agencies, how they differ, what their ratings mean, and how to use that information when choosing the best insurance company for your needs.
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Why Insurance Carrier Ratings Matter
An insurance policy is a promise—one that may not be fulfilled for years, even decades. So, a key question becomes: Will the insurer still be financially sound when it's time to pay out?
That’s where rating agencies come in. They analyze insurers based on their capital reserves, debt, claims-paying ability, and long-term stability. A higher rating generally means lower risk for policyholders.
“Financial strength ratings are your window into whether an insurer can keep its promises tomorrow.”
Meet the Big Three Rating Agencies
Let’s dive into what each of these agencies does and how they assess insurers
1. AM Best
Focus: Insurance-specific
Scope: Solely evaluates insurance companies
Rating Scale: Ranges from A++ (Superior) to D (Poor) and F (In Liquidation)
Pros:
Deep specialization in the insurance sector
Transparent methodology
Recognized standard in the industry
Cons:
Ratings may be less known outside of insurance circles
Can be harder for consumers to interpret without guidance
2. Moody’s Investors Service
Focus: Broad financial institutions, including insurers
Scope: Includes credit ratings, economic analysis, and risk assessment
Rating Scale: AAA (Exceptional) to C (Lowest)
Pros:
Well-known in financial markets
Ratings consider both global and economic factors
Cons:
Less focused on insurance specifically
Ratings can be conservative and slower to change
3. Standard & Poor’s (S&P)
Focus: Broad financial strength and creditworthiness
Scope: Insurance companies, corporations, governments
Rating Scale: AAA (Extremely Strong) to D (Default)
Pros:
Widely recognized globally
Comprehensive credit risk analysis
Cons:
Ratings not always easy to interpret for consumers
Broader financial picture may overlook niche insurance risks
"In insurance, trust isn’t just about customer service—it’s about long-term solvency."
Comparison Table
Rating Agency | Primary Focus | Rating Range | Industry Specialization | Consumer Familiarity |
AM Best | Insurance Only | A++ to F | High | Medium |
Moody's | General Finance | AAA to C | Moderate | High |
S&P | General Finance | AAA to D | Moderate | High |
Note: A ratings drop doesn’t necessarily mean an insurer is failing, but it could indicate increased financial strain or risk exposure.
Final Thoughts: How to Use These Ratings
At CIB Insure, we believe your insurance is only as good as the company backing it. That’s why we don’t just look at the lowest price—we consider financial strength, customer service ratings, claims handling, and overall value.
When comparing policies, use these ratings as a filter:
A-rated or better? That’s a good sign.
Below B? Proceed with caution and ask why.
Multiple carriers with similar coverage and price? Choose the one with stronger ratings.
Understanding these ratings helps you make informed, long-term decisions—and as your broker, we're always here to explain the fine print.
Have questions about your current insurer’s rating or want to compare companies? Contact us at www.cibinsure.com or call 770-755-1775. Let’s make sure you’re protected by a carrier you can trust.