One of the best ways to choose the right health insurance company is to compare the ratings of the different health insurance companies. These ratings, which have been put together by professional organizations with a lot of market knowledge and information, aid you in knowing how is the company operating, and how has it been developing.

By comparing the health insurance company ratings, the financial strength of the company, competitive forces and changing fundamentals are taken into consideration. If the health insurance company cannot pay future claims or benefits, the other considerations are unimportant.  This gives you also the financial strength of the health insurance company, and whether it is capable of clearing claims made to the company.

There are various rating schemes available online to get the ratings of health insurance companies, like Fitch Ratings Insurer Financial Strength Rating, Standard & Poor's Insurer Financial Strength Rating and Credit Watch. These ratings provide an opinion on the financial strength of the health insurance company and whether it can meet the obligations of its policyholders on a timely basis. It does not address the willingness of the insurance company to honor its company’s obligations, or its quality of claim handling services.

Understanding the ratings

The health insurance companies are rated on a scale from AAA to CC. The health insurance companies rated NR have not been rated. The health insurance companies rated AAA have extremely strong financial characteristics, while those rated CC have weak financial characteristics, and may not be able to pay the claims. Those health insurance company ratings of BBB+ or higher are considered secure, while those with ratings BB+ and lower are vulnerable. A plus (+) or minus (-) sign following the ratings from AA to CCC show the relative standings with the major rating categories. Some health insurance ratings have DDD as a rating. This rating is assigned to the insurers that have either failed to make payments in a timely manner or have been subjected to some type of regulatory intervention.

The rating usually gives you also when was the last time this company was rated, which you should take into consideration too, as companies can be strong one year and fall apart the next year. Ratings also tell you if the rating, when last changed, improved or declined.

For more information on Rating definitions, visit the S&P Financial Strength Rating definitions page.

Rating Resources

Here are some sites that can be useful when comparing Health Insurance companies:

• U.S. News: America’s Best Health Plans
• A.M. Best Company: Financial and Insurance companies Ratings
• Fitch Ratings Insurance Group
• S&P Insurer Financial Strength Ratings