Catastrophic Health Insurance – Understand How Insurance Company Ratings Work

catastrophic health insuranceWhile you may think a catastrophic health insurance company is ruled simply by supply and demand, the process is a little more complicated than that. Many other essential factors are used to determine operations and performance of a company, such as the state of the economy, bank rates, and government policies.

Because of these factors, ratings firms have been developed to evaluate the various catastrophic health insurance companies to determine whether the companies are stable financially and able to cover the costs of their customer’s medical expenses for years to come.

How Catastrophic Health Insurance Companies are Rated

Many different organizations are responsible for rating catastrophic health insurance companies. Here are just a few.

  • Standard and Poor’s
  • Moody’s Investors Service
  • A.M. Best
  • Weiss Research
  • Duff and Phelps

These organizations give consumers and idea of the financial status of the catastrophic health insurance company through their ratings. The rating is influenced by many different factors, including losses and gains, mergers with different companies, and financial decisions.

Rating companies don’t look at catastrophic health insurance companies one time and decide a rating. They continue to keep tabs on the company for as long as it is up and running. The rating may change as new factors are introduced into the equation, letting the company know what its strengths and weaknesses are. A high rating is always the goal of a catastrophic health insurance company because high ratings mean more customers. Low ratings alert a customer to bad companies and will drive potential customers away.

The actual way catastrophic health insurance companies are rated differs depending on the organization. For instance, Standard and Poor’s determines a company’s worth by their ability to pay the claims of their customers, while A.M. Best looks mainly at the company’s financial strength.

Why a Catastrophic Health Insurance Rating Is Important

There are several reasons these catastrophic health insurance ratings are so important for both the customer and the company itself. Here are just a few.

  • A good rating will let you, as the customer, know that a company has the financial means to pay your claims should you suffer from an unexpected medical event.
  • Good ratings mean that a company will be around long enough to meet your short-term and long-term insurance needs.
  • Companies with great ratings are able to understand how they compare with other catastrophic health insurance companies in the industry.
  • Ratings often determine whether a company is able to introduce certain product packages into the market.
  • Ratings for catastrophic health insurance companies allow customers to determine exactly who they are handing their hard earned money over to. With a great rating, a company will be able to increase customer confidence, and, as a result, greatly increase their customer base.
  • Ratings also help customers choose between different competitive companies on the market. A rating provides the customer with statistics and valuable information they need for choosing the best catastrophic health insurance available.

Before you sign up for catastrophic health insurance, make sure you know the company’s insurance rating. Every insurance company is not the same. Do your homework first.

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