Carrier Ratings point to the financial dependability and sustainability of the carrier. I promote insurance carriers which are A rated by Nationally Recognized Statistical Ratings Organization (NRSRO), nationally recognized for its abilities as a credit rating agency from the United States Securities and Exchange Commission. Ten rating agencies are approved as an NRSRO.July 2022, Demotech withdrew ratings on 17 carriers, reflecting its new higher standards.July 12, 2022, Demotech was approved by the SEC as the 10th NRSRO.
Reasons to consider the financial stability of your insurance carrier:
Homeowners who have equity to protect
Ownership of Higher Value homes (Most state guarantee funds will not cover greater than $300,000 total of dwelling and contents coverage if a carrier fails.)List of current NSRSOs:A.M. Best Rating Services, Inc.
DBRS, Inc.
Demotech, Inc.
Egan-Jones Ratings Co.
Fitch Ratings, Inc.
HR Ratings de México, S.A. de C.V.
Japan Credit Rating Agency, Ltd.
Kroll Bond Rating Agency, Inc.
Moody's Investors Service, Inc.
S&P Global Ratings
Reasons homeowners may choose a carrier unrated by NRSRO:
Animals with claims history , Polybutylene plumbing
Home and contents combined value < $300,000
Owners may have little or no equity in the home, basically just wanting a piece of paper to show the lender.
Differences may never have been properly explained, or incorrect information provided. Many carriers have common or similar names that need to be cross-referenced with the carrier address to identify.
Additionally, costs and requirements for re-insurance are expected to continue rise for carriers, while “A” rated carriers have already met higher standards. https://www.insurancejournal.com/news/southeast/2020/02/11/558055.htm The Sarasota Times-Herald wrote a Pulitzer prize winning article on the subject of carrier strength. https://www.pulitzer.org/winners/paige-st-john History: FL Specialty Insurance Company failed during the 2019 hurricane season.
August 2, 2019 non-NRSRO affirms A rating on FL Specialty Insurance Co
August 16, 2019 non-NRSRO downgrades FL Specialty Ins Co; no longer A
October 2, 2019 Court declares FL Specialty Ins Co insolvent and begins liquidation
https://www.insurancejournal.com/news/southeast/2019/10/07/544788.htm
2020: Capitol Preferred plans to cancel nearly 24,000 policies due to inadequate reserves required by law. Florida Office of Insurance Regulation approved this action with requirements on May 12, 2020. One requirement is submission of an updated business model to FL OIR to help determine if Capitol Preferred should remain open for business. A non-NRSRO had affirmed its A rating 3-23-2020.
2021: Insurers are forced to drop customers, at the beginning of hurricane season:
Universal Insurance Co of North America, Southern Fidelity
Gulfstream fails during hurricane season
Some may compare differences in price from one policy to another as a percentage. The real statistics are that the difference in price of insurance may equal 1 or 2 tenths of a percent of the reconstruction cost of the home. This would mean the worst case scenario would need to be avoided for roughly 500 to 1000 years.