Edition 10/2002
Insurance
Is About Security.
Ensure Your Insurer Is Secure.
Sport
and Recreation administrators will be well aware of the situation in
regard to the cost and availability of liability insurance in
today’s market. We are
concerned that in these difficult circumstances consumers, in their
search for insurance cover, may look to insurers with inappropriate
financial security.
Insurance
is purchased to provide financial security in the event of a claim.
It is vital that consumers satisfy themselves that the entity
with whom they are effecting cover has sufficient financial strength
to pay claims, not only today but also into the future.
This is particularly relevant when considering the purchase of
“long tail” insurance products such as public liability where a
claim may not be settled for years to come.
The
most effective method of checking an insurers financial security is
via one of the claims paying and financial strength rating companies.
Two such companies are A.M. Best and Standard and Poor’s.
Best’s
Ratings are recognised worldwide as the benchmark for assessing
insurers’ financial strength. A.M.
Best’s ratings reflect an in-depth knowledge of the insurance
industry developed during its 100-year relationship with the business.
The objective of Best’s rating system is to provide an opinion as
to an insurer’s financial strength and ability to meet ongoing
obligations to policyholders. Their opinions are derived from
an evaluation of a company’s balance sheet strength, operating
performance and business profile as compared with Best’s
quantitative and qualitative standards.
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The
analysis requires a high level of disclosure.
Companies are asked to provide annual statements, including
detailed information about the operations, reserving, environmental
and catastrophe exposures, as well as supplemental information,
captured via proprietary rating forms, that they feel is necessary for
a thorough and adequate analysis.
In addition, rating meetings are conducted with individual
companies, typically on an annual basis. These meetings involve senior officers of the company and
provide analysts with an understanding of the company’s strategy and
future direction.
Because
A.M. Best’s rating system subjects all insurers to the same rigorous
criteria, the ratings offer a means of directly comparing insurers,
regardless of their country of domicile.
This consistent approach, as well as A.M. Best’s un-compromised
regulation for third-party neutrality, has led to the acceptance of
Best’s Ratings as a reliable benchmark on a global scale. Such a benchmark is increasingly vital to an international
market that demands proof of financial strength and stability in the
face of widespread deregulation, mergers, acquisitions and other
critical financial factors.
The
analytical process incorporates a host of quantitative and qualitative
measures, including comparisons to peers and industry standards as
well as assessments of an insurer’s operating plans, philosophy and
management. Best’s Rating methodology is continually fine-tuned and
adapted to reflect ever-changing industry, regulatory and legal
developments, as well as changes in underlying business fundamentals.
Best’s
“Secure” Ratings are as follows: -
·
‘A++’,
‘A+’ Superior
·
‘A’,
‘A-‘
Excellent
·
‘B++’,
‘B+’ Very
Good
Continued
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