Checking a company before you buy
Four minutes, two free databases, and nobody selling you anything will mention them.
Most insurance shopping compares price and coverage. Almost none of it compares the company, which is odd, because the company is the part that has to behave well at claim time and still exist in thirty years.
Two free tools answer those questions. Neither is advertised, for obvious reasons.
The complaint index
When someone complains to a state insurance department, it gets recorded. The National Association of Insurance Commissioners aggregates that nationally and publishes it free through its Consumer Information Source.
The headline number is normalised for company size, which is what makes it usable. A value of 1.00 means the company drew about the number of complaints expected for its share of the market. Above 1.00 is more than expected; below is fewer.
So 2.00 is roughly twice the complaints you would expect for a company that size, and 0.50 is about half.
Read it properly
The index has real limits, and knowing them stops you over-reading it.
- It counts complaints closed by regulators, not everyone who was unhappy
- It does not separate complaints found to have merit from those that were not
- It varies by line — a company can look different for auto than for life
- Small companies produce volatile numbers, since a handful of complaints moves it a lot
- A consistently high index across several years is the signal; one bad year is much weaker evidence
The reasons are more useful than the number
The data breaks complaints down by type — claim handling, delays, denials, policyholder service, underwriting.
An insurer whose complaints cluster around claim delays is telling you something specific about the experience you would have at the moment that matters most. That is more informative than the headline figure.
Financial strength is a different question
The complaint index measures how a company treats people. Financial strength ratings measure whether it can pay. A company can score well on one and poorly on the other.
AM Best, S&P, Moody's, Fitch and KBRA all publish ratings, generally free with registration. One thing to get right: the scales are not interchangeable. AM Best's top categories are A++ and A+, so an A from AM Best sits below its highest tier, while an A from another agency sits somewhere else entirely on that agency's scale.
A rating quoted without naming the agency that issued it is not telling you much.
When financial strength matters most
- Permanent life insurance you expect to hold for decades
- Annuities, where you are relying on payments over a long period
- Any coverage above state guaranty association limits
- Long-term care coverage
- Anything accumulating cash value
The four-minute version
Look up the complaint index for the specific line you are buying, over more than one year, and compare it against the other companies you are actually considering rather than the whole market. Then check the financial strength rating, the outlook, and when it was last affirmed.
That is it. It costs nothing and it is the only part of insurance shopping where you get objective third-party information rather than marketing.
One more thing worth knowing: most states prohibit insurers and agents from using state guaranty association protection to advertise or induce a sale. If someone is selling on that basis, that is a problem in itself.
Want this checked for your situation?
General information only. A licensed insurance professional can tell you what actually applies to you.
General information only, not insurance advice. Coverage, availability, and terms vary by insurer and by state. Quote My Policy LLC is a licensed insurance producer.