Insurance companies offer protection against financial losses resulting from a variety of hazards. Insurance policies typically pay for losses resulting from auto accidents, damage or loss of property, disability, medical and dental care or death. As private corporations, insurance companies sell policies to individuals and businesses, collect premiums and pay out claims under certain circumstances. What makes a good insurer, however, involves a bit more.
Contract Agreement
The insurance agreement should clearly specify the terms of the policy, such as the premium, length of coverage, types of losses covered and amount of benefit to be paid out. A good insurance company issues insurance contracts that are unambiguous and competitive in pricing. It should also enable individual consumers to customize their policies by offering a wide range of deductibles and coverage options.
Claims Payment
Reputable insurance companies make fair and timely decisions on claims. When the insurance company denies a claim, it sends a letter that clearly explains the reasoning and delineates the appeal process. Furthermore, the customer service representative of the insurance company is expected to be courteous and knowledgeable when you call for assistance.
BBB Standing
Checking the Better Business Bureau (BBB) website can give you important information on how an insurance company has conducted business with other customers. The BBB provides a free online report on the company's membership status and customer experiences. An insurance company in good standing should be free of unresolved complaints as well as any government intervention for dishonest practices.
Licensing
A state license is fundamental to the operation of an insurance company. Insurance companies that are deemed to meet standards are licensed to conduct business in that state. Each state has an insurance commissioner's office that regulates insurance companies and their products. Before you purchase an insurance plan, check with the state to confirm that the insurer is in good standing.
Market Share Ranking
Consumers may find it useful to know who the industry leaders are by market share. This information is available online by the Insurance Information Institute, a private U.S.-based organization whose mission is "to improve public understanding of insurance." The institute ranks insurance companies based on premium dollars earned under specific insurance types: property/casualty, life insurance, private and commercial auto, commercial lines and workers' compensation insurance.
Financial Stability
As a consumer, you would want your insurance carrier to be able to meet its obligations to make benefit payouts. A viable insurance business involves collecting premiums from policyholders and investing the premiums in a well-balanced portfolio of financial assets and real estate. Good insurance companies make sound investment choices that can generate enough income to pay off policy claims. You can get a general sense of a company's financial strength by researching its stock performance and bond ratings.
Member Comments