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- What AAA Insurance rating says about its performance and reliability
Discover the latest AAA insurance rating and how it benefits brokers. Learn how AAA’s ratings can help you guide clients and grow your insurance business
The US auto insurance industry is both large and highly competitive, with hundreds of providers crowding the market. This sector is so large that auto insurance now comprises the dominant line of business within the property and casualty sector, taking up about 35 percent of the total P&C market.
When you have clients that are looking for viable auto insurers, it is part of your job as an insurance broker to find as many viable choices for them as you can. A possible option is AAA Auto Insurance. To decide if this insurer is a viable choice, good references include AAA insurance ratings and reviews like this one. In this article, see how AAA Insurance fares, so you can make an informed decision.
AAA insurance rating: financial strength
An insurance company’s financial strength rating (FSR) shows whether an insurance company like AAA Insurance can honor claims. Looking at its FSR can help you decide whether its products are reliable and if the company will be able to pay your client’s claims.
Of the four insurance ratings agencies, only A.M. Best and S&P gave ratings for AAA Insurance. Here is what their ratings indicate:
A.M. Best – “A” or Excellent
The AAA Insurance rating of A.M. Best is the third highest rating given by this insurance rating agency. The “A” rating signifies that AAA Insurance has an excellent ability to meet its ongoing insurance obligations to policyholders.
Companies that have this rating are considered financially strong, secure, and reliable, although not at the very top “Superior” (A++ or A+) levels. The “A” rating also reflects strong capitalization, solid operating performance, and prudent risk management.
S&P – “A” or Strong
As with the rating from A.M. Best, the “A” rating from S&P is also the third highest on their scale. This means that AAA Insurance has formidable financial security characteristics and is expected to have a strong capacity to meet its financial obligations. The “A” FSR was also an upgrade from “A-.”
However, this insurer is somewhat more susceptible to adverse business or economic conditions than higher-rated insurers with the AA or AAA rating from S&P. This rating also signifies that the company has a low risk of default and a solid financial foundation.
An interesting fact about AAA Insurance is that it is not a single national entity, but rather, is underwritten by various regional motor clubs. These clubs include:
- Automobile Club of Southern California (SoCal)
- CSAA Insurance Group
- Auto Club Group
Fitch and Moody’s did not provide any financial strength ratings for AAA Insurance, as they tend to focus more on rating larger, national companies. Obtaining financial strength ratings is not without cost; insurance companies request and pay for rating services. Some of the regional AAA insurers may not see a business need to buy ratings from all agenci…