DemoTech had credibility? DemoTech giving financial ratings reminds me of Phillip Morris proclaiming that cigarettes are perfectly healthy in the 50’s.
As it pertains to national carriers I’d say AM Best is pretty good. The single state and small regional carriers they seem to have an issue with.
Demotech despite the outcry here has been many months ahead of other rating agencies on most insolvencies. They simply need to figure out a rating system that doesn’t give every carrier that asks an A.
The problem is that the way the federal laws are written, you either have a Demotech A rating or you are out of business. There isn’t a spectrum for them to say this company is not perfect but better than this other company so it becomes a pass/fail grade. They more power than the regulators so I’m guessing they are hesitant to use it unless absolutely necessary.
Florida Specialty was downgraded twice before receivership. American Keystone? Downgraded moths before official action. Poe? Remember them? Downgraded 2 months before AM Best caught on.
Now I’m not saying that they’re perfect. In fact, they have to find some ratings other than “A’ for every company that just asks for it. That said they’re a lot faster to the game than most…and if they get a downgrade at Demotech YOU better start moving your business.
What about the carriers that aren’t AM Best rated and have BIG CAT Bonds on the verge of expiration? They don’t have to publish. Bonds are not insurance or reinsurance.
What was that? What…? Was that the sound of Demotech’s credibility sailing away?
What a monumental let down, some of these carriers are so thinly capitalized that a strong fart will send them into receivership.
DemoTech had credibility? DemoTech giving financial ratings reminds me of Phillip Morris proclaiming that cigarettes are perfectly healthy in the 50’s.
Mickey – How do you feel about the ratings of AM Best? Do you think they are credible?
As it pertains to national carriers I’d say AM Best is pretty good. The single state and small regional carriers they seem to have an issue with.
Demotech despite the outcry here has been many months ahead of other rating agencies on most insolvencies. They simply need to figure out a rating system that doesn’t give every carrier that asks an A.
The problem is that the way the federal laws are written, you either have a Demotech A rating or you are out of business. There isn’t a spectrum for them to say this company is not perfect but better than this other company so it becomes a pass/fail grade. They more power than the regulators so I’m guessing they are hesitant to use it unless absolutely necessary.
Don’t fret about it, they’ll downgrade some of them after they go into receivership like they always do.
Or
Never trust a rating company that doesn’t have a rating other than A
Florida Specialty was downgraded twice before receivership. American Keystone? Downgraded moths before official action. Poe? Remember them? Downgraded 2 months before AM Best caught on.
Now I’m not saying that they’re perfect. In fact, they have to find some ratings other than “A’ for every company that just asks for it. That said they’re a lot faster to the game than most…and if they get a downgrade at Demotech YOU better start moving your business.
What about the carriers that aren’t AM Best rated and have BIG CAT Bonds on the verge of expiration? They don’t have to publish. Bonds are not insurance or reinsurance.