Q. – There has been a lot talk about insurance companies going under. How do I know if my insurance is at risk?

Insurance companies whose primary business is health carry securities on their balance sheet that are shorter term in nature than a company whose primary business is life insurance or property and casualty.   Health insurance carriers take the $1 in and immediately pay out $0.80 of that dollar.   Life insurance companies take in a dollar with the intention of paying out the claim at a much later date.   Health Insurance companies are far more liquid and flexible with their portfolio thus they, for the most part are not affected by the long term debt obligations, tied to mortgage backed securities, as other types of insurance companies.   Additionally, health insurance policies are regulated by State governments and the State, backed by a pool of the rest of the insurance carriers, guarantee that coverage in case a carrier does go insolvent.   Now sometimes insurance carriers, whose business is health, do close or go insolvent.   Many of these carriers did not have an AM BEST rating, (ambest.com) since they did not buy a rating from AM Best to sell their commercial debt to the public, so you couldn’t judge the financial health of the carrier, or would have a rating not indicative of it’s ability to operate.   TheStreet.com,(formerly Weiss Ratings) rates insurance companies based on public information filed in States and, in our opinion, is an excellent tool to compare carriers.   Don’t look for an A+ rating from any of the health carriers.  A grade of C+ or better is, in our opinion, safe to do business with.  


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