Phabbyfundz
Active member
There are several major credit agencies that determine insurers financial strength and viability to meet claim obligations factors considered includes company earnings, capital adequacies, operating leverage , liquidity , investment performance, reinsurance programs and management ability, integrity and experience.
The insurance business is based on spread of risks. The more widely risk is spread the more accurately loss can be estimated. An insurance company can more accurately estimate the probability of loss on 100,000 homes than on ten. Years ago insurers were required to use standardizes forms and rates developed by rating agencies. Today large insurers uses their own statistical loss data to develop rates. But small insurers or insurers focusing on special lines of business with insufficient broad loss data to make them acctuarially reliable depends on pool industry data collected by such organizations.
The insurance business is based on spread of risks. The more widely risk is spread the more accurately loss can be estimated. An insurance company can more accurately estimate the probability of loss on 100,000 homes than on ten. Years ago insurers were required to use standardizes forms and rates developed by rating agencies. Today large insurers uses their own statistical loss data to develop rates. But small insurers or insurers focusing on special lines of business with insufficient broad loss data to make them acctuarially reliable depends on pool industry data collected by such organizations.