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Chapter 10 Nature of the Insurance Industry
Section 10.4
Consumer Resources
Objectives
After completing this section, you will be able to:
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companies.
Ratings Agencies
You know that insurance companies put a lot of resources into
figuring out what risk a consumer represents to them. But, how do
consumers know what risk an insurance company represents to
them? Two information sources can give consumers information
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departments.
Ratings agencies provide an expert opinion on the health of
companies and investment products. These agencies employ hundreds
of financial analysts and statisticians who work together to come up
with the ratings. Financial analysts research companies to determine
their ability to pay their debts. Statisticians collect and analyze
numerical data.
Consumers and investors can use ratings information when making
financial decisions. However, the ratings are opinions, not facts or
guarantees. Ratings agencies took some of the blame for the economic
recession that began in 2007. This economic crisis reminded investors
not to rely solely on ratings agencies to make investment decisions.
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grading system to identify the financial health of a company. Each
uses its own set of criteria to analyze companies and its own set of
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State Consumer Resources
Ratings assigned by ratings agencies are educated opinions about
an insurer’s financial health. Consumers should consider the ratings,
but also use other information to make a decision. Another good
resource is state insurance departments.
Terms
ratings agencies
financial analyst
statisticians
state insurance
departments