Will your insurance company survive?

Mark Nestmann writes in the Sovereign Society’s Offshore A-letter about how you can evaluate the financial health of the companies you rely upon for insurance.

Among his suggestions:

Make a list of every insurance policy you own–including property and casualty (auto, home, business); life; medical (including long-term care); disability; and any annuities issued by insurance companies.
Go to TheStreet.com to see if your companies are rated and, if so, how they rate . . . and why.
If your insurance company is public, look at the trend in share prices using a tool like Yahoo Finance. “Even the strongest insurers have been battered by the economic downturn. Don’t panic if you see price declines in line with declines in the overall market (i.e., 30%-50%). However, many insurance companies have lost 90% or more of their market value in the last 12-18 months. If you own policies from one or more of these companies, it’s safe to assume that major investors have dug into the company’s financials and don’t like what they see,” writes Nestmann.
“While you’re looking at share prices, also review news stories about the company. . . . If the insurance company isn’t publicly traded, try to find news about it on a search engine. Look for news of credit rating downgrades, resignations of top officials, lawsuits, regulatory actions, etc.”
Check the company’s credit ratings from rating agencies’ websites:
“Credit ratings are far from perfect. [Far too many financial companies have gone from even AAA-rated to junk virtually overnight.] But, they’re a start.”

Nestmann has several additional practical suggestions and I encourage you to read his entire article. In the last few paragraphs he suggests some very concrete and practical steps to take in case you find your insurance company really is in trouble.

Again, check it out at Will your insurance company survive?.

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