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Financial stability and ability to pay claims

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Within all lines of insurance, a provider’s services become redundant without the support of a financially stable and committed underwriter.

An underwriter in the insurance sector supplies the insurance provider with the financial capacity to pay claims. Insurance underwriters don’t interface directly with the consumer; that is the job of brokers or providers who traditionally manage the account and handle all areas of customer service. Most underwriters focus on a specific subset of the insurance world, whether it’s corporate liability, healthcare, car insurance or another.

It is not uncommon in the insurance market for providers to be misleading or even dishonest in relation to the level of cover they offer or the credit rating of the insurer that underwrites their policies. Having a financially insecure underwriter can often leave providers without the funds to pay claims, forcing schools to try and recover their money from the Financial Services Compensation Scheme.

When taking out an insurance policy you need to know that your insurer has the financial strength and stability to pay claims. It is therefore always worth enquiring about which insurer underwrites their policy and what their credit rating is. You can also check the credit rating of your insurer using an online credit rating agency such as Standard and Poor’s Global.

When searching for a provider make sure you ask...

Which insurer underwrites your policy?
What credit rating do they have?
Can you provide documentation to demonstrate their ability to pay claims?