Insurers are also monitored by the various rating service companies discussed earlier in this program:
- A. M. Best
- Moody's
- Standard & Poor's
- Weiss Ratings, Inc.
- Fitch Ratings
Rating service companies analyze the financial operations of insurance companies, including the adequacy of their reserves and issue independent assessments of the insurer's ability to pay its claims on time and meet all other financial obligations.
The primary purpose of this unique accounting system is insuring that insurance companies weather economic ups and downs, and will meet their contractual obligations to their policy and contract holders. Despite these safeguards, however, insurance companies can and do fail from time to time.
Yet, as discussed in Unit 12, when that happens policyholders are still protected, because State Insurance Departments and guarantees put failing companies into receivership or under strict supervision or bail them out, or both. As a result, insurance company annuities and life products are safe places for clients' money.
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