If you want to know who rates insurance companies, there are five independent organizations plus every state’s insurance department. A.M. Best, Standard & Poor’s, Moody’s, Fitch, and Demotech grade an insurer’s financial strength, which is the question of whether the company can actually pay your claim. J.D. Power and the Better Business Bureau rate the customer experience. The National Association of Insurance Commissioners, working with state regulators, publishes complaint data and tracks financial filings. Each measures something different, and knowing which rater answers which question is the whole point of looking any of them up.
Raters That Measure Financial Strength
Financial strength ratings answer one question: if you file a claim, can this company pay it?
A.M. Best
A.M. Best is the only major rating agency focused exclusively on insurance. Founded in 1899, it evaluates insurers by examining balance sheet strength, operating performance, business profile, and enterprise risk management.1A.M. Best. Best’s Credit Rating Methodology (BCRM) – An Overview Its Financial Strength Ratings use letter grades running from A++ (Superior) at the top down to D (Poor). Because A.M. Best concentrates on insurance-specific issues like reserve requirements and reinsurance, its ratings are the ones mortgage lenders and state regulators cite most often.
Moody’s, S&P, and Fitch
Moody’s, Standard & Poor’s, and Fitch are general-purpose credit rating agencies. They cover bonds, banks, governments, and corporations alongside insurers. Their Insurance Financial Strength Ratings reflect an opinion of the insurer’s ability to pay policyholder claims on time.2Moody’s Investors Service. Moody’s Rating Scale and Definitions The scales differ slightly. Moody’s top rating is Aaa; S&P and Fitch both label their highest grade AAA. Because these agencies also analyze global economic conditions and investment portfolios, their perspective complements A.M. Best’s insurance-specific lens.
Demotech
Demotech rates smaller regional and specialty property and casualty insurers that the larger agencies often skip. That coverage matters in states with concentrated catastrophe risk, where regional carriers write a large share of homeowners policies. Many mortgage lenders accept a Demotech Financial Stability Rating as proof that a carrier is financially sound enough to insure a financed property. If your homeowners policy is through a smaller regional company, Demotech may be the only agency that has rated it.
What Those Financial Grades Actually Mean
A letter grade is only useful if you know what it predicts. The clearest way to read it is through historical impairment rates, which measure how often companies at each level have run into financial trouble.
A.M. Best’s study of U.S. insurers from 1977 through 2023 found that companies rated A++ had a 0.00% one-year impairment rate and a 0.00% fifteen-year rate. At A, the one-year rate was 0.08%, climbing to 2.47% over fifteen years. Drop to B+, and the fifteen-year rate jumps to 5.57%. For companies rated C or C-, nearly one in five experienced financial impairment within fifteen years.3A.M. Best Company, Inc. Best’s Impairment Rate and Rating Transition Study – 1977 to 2023
The practical takeaway: A- or better from A.M. Best is the threshold most industry participants treat as safe. Fannie Mae, for example, requires property insurance carriers to hold an A.M. Best rating of A- or better along with a financial size category of VII or better before it accepts the policy on a mortgage it purchases.4Fannie Mae. Insurance Carrier Rating If your mortgage lender enforces a similar standard, that’s where it comes from. Carriers below B+ show meaningfully higher historical failure rates, and anything in the C range should prompt you to look at alternatives.
Rating Outlooks
Along with the letter grade, each agency assigns an outlook that signals where the rating might head next. Stable means the agency expects the grade to stay put. Positive suggests a possible upgrade if finances keep improving. Negative is a warning that a downgrade could follow if conditions deteriorate.5Moody’s Investors Service. Moody’s Rating Symbols and Definitions Rating changes can happen any day, so checking once a year before renewal is a reasonable habit.
Raters That Measure Customer Experience
Financial strength tells you whether a company can pay. Customer-experience data tells you whether they’ll make the process miserable. These are separate questions, and a financially rock-solid insurer can still have terrible claims handling.
J.D. Power
J.D. Power publishes annual studies based on direct feedback from thousands of verified policyholders. Its U.S. Auto Insurance Study measures satisfaction across seven dimensions including trust, price, ease of doing business, and problem resolution.6JD Power. 2025 U.S. Auto Insurance Study A separate Auto Claims Satisfaction Study evaluates the claims experience specifically, including fairness of settlement, time to settle, and communication.7JD Power. 2025 U.S. Auto Claims Satisfaction Study High scores generally indicate a smoother experience when you actually use the policy.
Better Business Bureau
The BBB tracks how companies respond to formal complaints and investigates allegations of deceptive advertising.8Better Business Bureau. Complaint Acceptance Guidelines Each complaint closes as resolved, answered, unresolved, or unanswered. An insurer that fails to respond can see its BBB grade drop, because responsiveness is a core element of how BBB evaluates businesses.9Better Business Bureau. How BBB Complaints Are Handled A pattern of “unanswered” or “unresolved” statuses is worth taking seriously.
NAIC Complaint Index
The NAIC’s Complaint Index is the most apples-to-apples comparison tool because it adjusts for company size. The index divides a company’s share of complaints by its share of premiums written. The baseline is 1.00.10National Association of Insurance Commissioners (NAIC). Market Regulation Handbook (2025 Edition) A score below 1.00 means fewer complaints than you’d expect given the company’s size. Above 1.00 means more. A company at 2.50 is generating two and a half times the complaints its market share would predict. The past three years of data are available through the NAIC’s Consumer Insurance Search page.11National Association of Insurance Commissioners. How to File a Complaint and Research Complaints Against Insurance Carriers
State Regulators as a Separate Layer
Independent rating agencies aren’t the only ones watching. State insurance departments conduct their own financial oversight, coordinated through the NAIC, which sets standards for the industry.12National Association of Insurance Commissioners. Supporting Insurance, Regulators, and Public Interest
Every insurer must file detailed annual and quarterly financial statements with regulators. Those filings disclose assets, liabilities, capital surplus, and premiums written, and they become public records. Regulators run the numbers through the Insurance Regulatory Information System, a set of thirteen financial ratios designed to flag trouble early, covering areas like net premiums written relative to surplus and reserve adequacy.13eCFR. 7 CFR 400.162 – Qualification Ratios A company that falls outside acceptable ranges on several ratios gets a closer look.
How to Look Up a Company’s Ratings
Before you search anywhere, find the exact legal name on your policy’s declarations page, usually printed near the top. The marketing name on your bill often differs from the legal name of the subsidiary that actually underwrites your policy, and subsidiaries within the same parent group can carry very different ratings. While you’re on the declarations page, grab the five-digit NAIC Company Code (sometimes called the Cocode or NAIC Number), which uniquely identifies every insurer in the country.14HL7 Terminology (THO). National Association of Insurance Commissioners (NAIC) Company Codes It also appears on proof-of-insurance cards. Searching by Cocode is more reliable than name, especially for companies with similar-sounding names.
Start with the NAIC’s Consumer Insurance Search tool. Enter the Cocode or full legal name to pull up the company’s licensing status, the states where it operates, the types of insurance it sells, and three years of complaint index data.15National Association of Insurance Commissioners. Consumer Insurance Search Results – CIS The NAIC recommends comparing complaints, financial data, and direct premiums written across several companies rather than relying on a single factor.11National Association of Insurance Commissioners. How to File a Complaint and Research Complaints Against Insurance Carriers
For the letter grades themselves, you have to visit the rating agencies directly. A.M. Best, Moody’s, S&P, Fitch, and Demotech each maintain searchable databases on their websites. Most require free account registration before you can search by name or Cocode. Once in, you’ll see the current rating, the outlook, and a history of upgrades and downgrades. A company trending downward over several years deserves more scrutiny than one that dipped and recovered.
Keep the different scales in mind when you compare. An “A” from A.M. Best and an “A” from Moody’s don’t mean exactly the same thing, because the methodologies differ. Compare within one agency’s scale rather than across agencies. And watch the outlook. A company rated A- with a negative outlook may be headed somewhere you don’t want to follow into a multi-year policy.