A pet insurance policy is a promise to help with eligible veterinary expenses, so it’s reasonable to ask whether the insurer behind it can meet its obligations. Pet insurance financial strength ratings can help answer that question. Rating agencies review financial information and assign assessments that reflect their view of an insurer’s ability to pay what it owes. But a high rating isn’t a guarantee that your claim will be approved, and it doesn’t measure customer service or coverage quality. Before choosing a plan, you’ll want to know which company actually underwrites it, what the rating says, and how to compare that information with premiums, deductibles, limits, and exclusions.
Key Takeaways
- Use ratings as one measure of financial reliability: They reflect an agency’s view of an insurer’s ability to meet policy obligations, not whether a specific claim will be covered or paid quickly.
- Verify the company behind the policy: Find the underwriter’s legal name in your documents, then confirm the rating agency, date, and current status.
- Compare the full policy, not just the rating: Weigh premiums, deductibles, reimbursement rates, coverage limits, exclusions, and your pet’s health needs before choosing a plan.
What Are Pet Insurance Financial Strength Ratings?
A pet insurance financial strength rating is an assessment of an insurer’s ability to meet its financial obligations, including those set out in its insurance policies. Rating agencies review financial information and other factors, then assign a grade or category to communicate their view of the insurer’s ability to pay what it owes.
For pet parents, the rating offers one way to assess the company behind a policy. It can be useful alongside the plan’s premiums, deductible, reimbursement rate, annual limit, and coverage details. A strong rating does not mean every claim will qualify for reimbursement, and it cannot guarantee a particular payment or timeline.
Financial strength ratings also answer a different question from customer reviews or claims-satisfaction scores. They focus on the insurer’s financial capacity, not how easy it is to reach customer service or how satisfied policyholders are with the claims process. SECURA’s overview of insurer financial strength ratings explains why the ability to meet obligations matters to insurance customers.
What does a rating say about an insurer’s ability to meet obligations?
A financial strength rating reflects an agency’s assessment of an insurer’s capacity to meet its policy and contract obligations. Agencies consider financial information and risk factors to evaluate whether the company appears able to pay what it owes. The rating is an informed assessment, not a guarantee of future performance.
Which Insurer’s Rating Should You Check?
When comparing pet insurance, look up the financial strength rating of the company responsible for the policy’s obligations. The brand on an ad, website, or quote may not be the same company that underwrites the coverage. Identifying the right company helps you use ratings as one part of an informed comparison, alongside premiums, coverage limits, deductibles, and policy terms.
Find the underwriting insurer named in your policy
Look for the underwriting insurer’s legal name in your quote materials, policy documents, or declarations page. The underwriter takes on the insurance risk and is responsible for the policy obligations. If you’re still comparing plans, ask the insurer or broker to confirm which company will underwrite your policy before you buy.
Use the full legal name when searching for a rating. Similar names or related companies can make it easy to find information about the wrong entity. A rating applies to the company identified by the rating agency, not automatically to every company connected with a policy. SECURA explains why an insurer’s ability to meet its obligations matters to customers.
Distinguish the insurer from the pet insurance brand or claims administrator
A pet insurance brand may market a plan and serve as your main point of contact, while another company underwrites the coverage. A claims administrator may handle tasks such as receiving paperwork, reviewing claims, or communicating with policyholders. These roles may belong to separate companies, so the name you see most often may not be the one whose financial strength rating you need to check.
Ask which company underwrites the policy and which company handles claims. Then look up the underwriter’s rating. This can help you compare the financial standing of the companies actually backing the plans, rather than relying on a familiar brand name alone. IndependentAgent.com advises insurance buyers to consider the financial rating of the carrier they choose.
Confirm the rating covers the company backing your policy
Before relying on a rating, compare the legal name in your policy documents with the company identified in the rating agency’s report. Insurance groups may include multiple related companies, and a rating for one entity does not necessarily apply to another. Check which agency issued the rating, when it was issued, and whether it is still current.
A.M. Best’s financial strength ratings, for example, assess an insurer’s ability to meet its policy and contract obligations, as CNBC explains. If you can’t confirm that a rating applies to your policy’s underwriter, ask the insurer or broker to clarify. A rating offers useful financial context, but it doesn’t guarantee that a particular claim will be approved or paid.
How Do S&P and Demotech Assess Insurers?
S&P and Demotech assess whether an insurer appears financially able to meet its obligations to policyholders, including paying covered claims. Their ratings offer a high-level view of the company’s financial strength, but they don’t guarantee that a claim will be approved or paid. They also don’t tell you whether a policy’s coverage, price, or exclusions fit your pet’s needs.
| What to compare | S&P | Demotech | | --------------------------- | ------------------------------------- | --------------------------------------------------------- | | Rating name | Financial Strength Rating | Financial Stability Rating | | Main question | Can the insurer pay claims? | Can the insurer meet obligations to policyholders? | | Factors named in the review | Capital, earnings, and risk exposure. | Balance-sheet strength, liquidity, reserves, and pricing. | | What it does not decide | Whether one pet claim is covered. | Whether one pet claim is covered. |
Both agencies assess whether an insurer can meet its obligations. They use their own methods and scales. A category from one is not interchangeable with a category from the other.
Before relying on a rating, check which legal entity it applies to. A pet insurance brand may use another company to underwrite its policies, and a rating for a related company may not apply to the insurer named in your policy. The agency, rating date, and current status matter, too. These details help you interpret the rating alongside policy terms, premiums, deductibles, reimbursement rates, and coverage limits.
S&P: capital, earnings, risk exposure, and ability to meet obligations
S&P’s Financial Strength Rating expresses the agency’s opinion of an insurer’s financial security, with a focus on its ability to pay claims. Capital and earnings help show whether the company has resources to absorb losses and continue meeting its obligations. S&P also considers the risks the insurer takes on, since an insurer’s exposure can affect the financial pressure it may face.
For pet parents, this rating is one way to assess the company backing a policy, not a prediction about how it will handle an individual claim. United Policyholders describes S&P’s rating as an assessment of an insurer’s ability to pay claims under its policies. Check your policy documents to confirm the rating belongs to the underwriting company listed there.
Demotech: balance-sheet strength, liquidity, reserves, and operating performance
Demotech assigns Financial Stability Ratings based on an insurer’s ability to meet obligations to policyholders. Its assessment includes balance-sheet strength, the liquidity of invested assets, financial leverage, loss reserves, and pricing. Together, these factors offer insight into the insurer’s resources and the financial practices that support its stability.
Liquidity matters because insurers need access to funds to pay obligations as they come due. Loss reserves represent money set aside for claims that have been reported or may arise from policies already in force. Pricing and operating performance also help show how well an insurer’s business supports its ongoing commitments. Demotech’s rating description outlines several of the financial measures it considers. Treat the rating as one part of your research, alongside the policy’s costs and coverage details.
How Do You Interpret Pet Insurance Financial Strength Ratings?
What S&P ratings like AAA, A, and A- mean
S&P’s Financial Strength Ratings express the agency’s opinion of an insurer’s ability to meet its policy obligations. AAA is the highest rating on S&P’s scale and indicates an exceptionally strong capacity to meet those obligations. A also signals a strong capacity, though it reflects more susceptibility to adverse economic or business conditions than higher-rated categories. A- is within the A category, with the minus sign showing a lower position than A.
What Demotech Financial Stability Rating categories mean
Demotech uses Financial Stability Ratings, often shortened to FSRs, rather than S&P’s letter-and-symbol scale. Its assessment considers an insurer’s ability to maintain a positive surplus for policyholders, along with factors such as liquidity, financial leverage, loss reserves, and pricing. Demotech’s scale includes categories such as A'', A', A, S, M, and L. Each category has a meaning within Demotech’s own system, so check the agency’s current definitions when reviewing a rating.
Why ratings from different agencies don’t directly compare
For a more consistent comparison, look at insurers rated by the same agency and read that agency’s description of each rating. If you’re comparing ratings from different providers, treat each as a separate assessment instead of trying to convert one scale into another. The NAIC explains why insurer financial strength ratings vary by agency.
How outlooks, watches, upgrades, downgrades, and withdrawals add context
A rating’s status and history can tell you more than its current level alone. An outlook indicates the possible direction of a rating over time. A stable outlook generally means the agency doesn’t expect a change in the near term; a positive or negative outlook signals that an upgrade or downgrade may be possible. A watch or review means the agency is assessing developments that could affect its opinion.
An upgrade or downgrade shows that the agency has changed its assessment. A withdrawn rating is no longer an active opinion, but the reason for withdrawal can vary. Check the agency’s notice for context, and consider whether the change relates to the insurer underwriting your policy. These details help you understand how an insurer’s financial assessment is evolving. SECURA describes how outlooks and rating changes offer additional context.
Where Can You Find Ratings and Solvency Disclosures?
Check insurer websites, policy documents, and financial disclosures
Start with your policy documents to identify the underwriting insurer, the company responsible for the policy’s obligations. Its name may differ from the pet insurance brand on the website or marketing materials. Check the declarations page, sample policy, or terms and conditions.
Then search the insurer’s website for financial strength ratings, annual statements, or financial disclosures. If the information isn’t easy to find, contact the insurer and ask where to verify its current rating. Some insurers also explain what a rating means. For example, SECURA describes Best’s ratings as an indicator of an insurer’s financial strength and creditworthiness. Use the legal name in your policy when searching, so you don’t confuse the underwriter with another company in the same group.
Search agency resources and state insurance filings
After identifying the underwriting company, search the rating agency’s website for its legal name. You may need to register or pay to access some agency reports. If the result is unclear, contact the agency to confirm which company it covers and whether the rating is current. A rating applies to the specific entity assessed, not automatically to every brand or policy connected with it.
Your state insurance department can also point you to company information and public filings. Use the NAIC directory of state insurance departments to find your state’s regulator. The United Policyholders guide to checking an insurer’s financial strength offers additional background on ratings. For the latest rating, confirm details with the agency that issued it.
Review statutory statements for more solvency information
For a more detailed view of an insurer’s finances, look for statutory statements filed with state regulators. Depending on the filing, you may find information about capital and surplus, investments, claims reserves, and other obligations. These documents can add context to a rating, but they may be technical and take time to understand. If you can’t locate a filing, ask your state insurance department how to access it.
What Can Solvency Disclosures Tell You?
Solvency disclosures give you clues about an insurer’s ability to handle financial obligations, including pet insurance claims. They can help you assess the company backing a policy, but they can’t tell you whether a specific claim will be covered or how quickly it will be paid. Review several measures together, and confirm that each disclosure applies to the insurer named in your policy.
How policyholder surplus and capital can absorb losses
Policyholder surplus is the difference between an insurer’s assets and liabilities. It acts as a financial cushion if claims or other costs are higher than expected. A larger surplus may give an insurer more room to absorb losses, but the number is most useful when considered alongside the company’s size, risks, and financial performance. It isn’t a fund set aside for your pet’s care, and it doesn’t guarantee payment of a claim.
How liquidity helps insurers meet obligations
An insurer may own valuable assets but still need to consider how quickly it can turn them into cash. Liquidity describes how readily assets can be used to meet obligations, such as claim payments and operating expenses. Cash and short-term investments are generally easier to access than assets that may take longer to sell or lose value during a sale.
How loss reserves cover current and future claims
Insurers estimate how much they’ll need to pay for claims and record those amounts as reserves. Estimates can include claims that have been reported but not settled, as well as claims that have occurred but haven’t yet been reported. Reserves help show whether an insurer has accounted for expected obligations. They aren’t separate funds assigned to individual policyholders.
How leverage, reinsurance, and risk exposure affect solvency
Leverage reflects the risks an insurer takes on compared with its available capital. If a company writes a large volume of policies relative to its surplus, unexpected losses may put added pressure on its finances. The types of policies it covers, where it operates, and the possibility of unusually costly claims also shape its overall risk exposure.
Reinsurance lets an insurer transfer some risk to another insurance company. It can provide support when claims are high, but it doesn’t remove every risk. The insurer still depends on its reinsurer to meet its share of the agreement. Rating agencies consider an insurer’s ability to meet short- and long-term obligations, along with factors such as risk and reinsurance, as described in CNBC’s overview of A.M. Best ratings. Review these factors alongside the insurer’s capital and claims obligations.
What public disclosures can—and can’t—show
Public disclosures can help you review an insurer’s financial condition, including its surplus, reserves, and rating history. State insurance filings may offer detailed financial information, while an insurer’s website may summarize its ratings or link to reports. Check the company name, rating agency, publication date, and current status to confirm you’re looking at information for the company backing your policy.
What Do Low, Changing, or Missing Ratings Mean?
A financial strength rating can help you assess an insurer, but it doesn’t tell the whole story. A downgrade, an unrated insurer, or a withdrawn rating deserves a closer look, not an automatic conclusion about whether your pet’s claims will be paid. Check the insurer’s current information and consider it alongside the policy’s coverage, cost, and terms.
Why a downgrade or negative outlook deserves closer review
A downgrade means an agency has lowered its assessment of an insurer’s financial strength. A negative outlook signals that the agency sees a greater chance of a downgrade, though it doesn’t mean one is certain. Both are reasons to review the insurer’s financial position and the agency’s explanation for the change.
Check when the rating changed and what prompted it. The agency may cite factors such as losses, investment performance, or capital levels. These details can help you understand whether the change reflects a longer-term trend or a specific concern. For example, A.M. Best considers multiple years of financial data when assessing insurers. Use that information as one part of your comparison, not as a prediction of what will happen with your individual claims.
Why an unrated insurer or withdrawn rating needs context
An insurer may be unrated because it hasn’t requested an assessment, doesn’t meet an agency’s criteria, or isn’t included in that agency’s coverage. A rating can also be withdrawn for different reasons, including a company’s decision to stop participating. The absence of a current rating doesn’t, by itself, explain the insurer’s financial condition.
First, confirm the legal name of the underwriting insurer in your policy documents. Then check whether another agency has rated that company and look for available state insurance filings. If you can’t find a current rating, ask the insurer or a licensed broker which company backs the policy and where you can review its financial information. United Policyholders explains what S&P ratings assess, including an insurer’s financial security and ability to pay claims.
Why a low rating signals financial risk but can’t predict unpaid claims
A low rating indicates greater concern about an insurer’s ability to meet its financial obligations. That’s worth considering when choosing coverage, particularly if you expect to keep the policy for years. Still, the rating can’t tell you whether a specific claim will be approved, how quickly reimbursement will arrive, or whether a particular claim will go unpaid.
How an insurer’s financial position and rating can change over time
An insurer’s financial position can change as claims costs, investment results, pricing, reinsurance, and other business conditions shift. Ratings can change in response. An assessment you saw when first comparing policies may not reflect the latest information, so check the rating’s date and status before buying or renewing.
How Can You Use Ratings to Compare Pet Insurance?
A financial strength rating can help you assess the insurer behind a policy, but it won’t tell you whether the coverage suits your pet or your budget. Use ratings alongside policy terms and quote details to compare options more carefully.
Compare current ratings from the same agency
Find the underwriting insurer listed in each policy, then compare its current rating with ratings from the same agency. Agencies use different methods and scales, so ratings from different agencies aren’t directly equivalent. Check that each rating is current, applies to the correct company, and hasn’t been withdrawn or replaced.
This gives you a more consistent starting point for assessing insurers’ ability to meet financial obligations. For example, A.M. Best ratings indicate an insurer’s financial strength and creditworthiness. A rating is useful context, not a recommendation to buy a particular policy. Keep comparing the coverage, price, and terms that matter to you.
Review rating history and recent changes
A rating is a snapshot, so check how it has changed over time. Look for a stable rating, an upgrade, or a downgrade, and note any change to the insurer’s outlook or rating status. A downgrade or negative outlook is a reason to read the agency’s explanation, but it doesn’t automatically mean the insurer can’t pay claims.
Rating history can add context that a single letter or category can’t provide. A.M. Best’s analysis considers more than 100 financial variables over five years. When reviewing a rating, note the agency, date, and company it covers. That helps you avoid comparing a recent rating with outdated information.
What Don’t Financial Strength Ratings Tell You?
A financial strength rating offers a useful snapshot of an insurer’s ability to meet its financial obligations. It can help you assess one important part of a pet insurance company, but it doesn’t tell you whether a specific policy is right for your dog or cat. A high rating does not automatically mean better coverage, simpler claims, or more helpful service.
They don’t measure customer service or claims handling
Financial strength ratings focus on an insurer’s financial condition. They don’t tell you whether customer support is easy to reach, whether representatives explain coverage clearly, or whether filing a claim feels straightforward. A company may be financially strong and still offer a service experience that doesn’t meet your needs.
They don’t replace reviewing the policy or understanding state protections
State insurance rules and consumer protections vary. If you have questions about an insurer’s license, a policy provision, or how to file a complaint, contact your state insurance department. Keep a copy of the policy and any written answers you receive. CNBC’s overview of A.M. Best ratings also recommends considering ratings alongside policy terms and applicable state protections. A licensed broker can help clarify what to compare, but the policy documents remain the source for your coverage details.
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Frequently Asked Questions
Does a high pet insurance financial strength rating mean my claim will be approved?
No. A rating reflects an agency’s assessment of the insurer’s ability to meet financial obligations. Whether a specific claim qualifies depends on your policy’s terms, exclusions, waiting periods, and claim requirements.
Which company’s rating should I check?
Check the company named as the underwriter in your policy documents. The pet insurance brand or claims administrator may be a different company. If you’re unsure, ask the insurer or a licensed broker to confirm the underwriter’s legal name.
Can I compare ratings from different agencies directly?
Not reliably. Agencies use different methods and rating scales. For a clearer comparison, look at ratings from the same agency, check that they’re current, and confirm they apply to each policy’s underwriter.
What should I do if an insurer has no current rating?
First, confirm you’ve searched for the correct underwriting company. Then check whether another agency has rated it, review available state insurance filings, or ask the insurer where to find financial information. An insurer without a rating isn’t automatically financially unstable, but you may have less information to assess.
What should I compare besides financial strength ratings?
Review the premium, deductible, reimbursement rate, annual limit, exclusions, waiting periods, and rules for pre-existing conditions. You may also want to check customer feedback about service and claims handling, since financial strength ratings don’t measure those experiences.