It is extremely difficult for the layperson to undertake the task of doing a financial review for an insurance company. As we have seen this past year the largest insurance company in the world fooled the government regulators as to their financial strength. So even though we are presenting a very basic strategy for making a financial review, please note that some of the most professional and bright people in the world sometimes get fooled in their financial analysis.
The easiest and quickest way to get a general overview of the financial health of insurance company is to go to the insurance rating companies. The four largest rating companies in this arena are A. M. Best, Moody's, Standard & Poor's, and Fitch. They all have their unique and proprietary analysis systems for coming up with their final evaluations. Simplistically, they are using historical financial data, industry norms, and regulation in the territories that they participate in, and anticipated future economic events that may arise in promulgating a grade of financial health.
Basically the rating companies are giving a grade to the financial health of the insurance company. This can range from an F to an A++. While you have to pay for a detailed analysis, you normally can get online the final grade for no charge. Usually you should seek out a company who has a rating of A- XV or greater.
This simple technique of going online in getting your carriers in grade is fast and easy and can give you the peace of mind that you are seeking. Not to mention, that many of your vendors and clients will require a minimum rating as we listed above.