Insurance companies in Florida are typically rated by one of two firms; Demotech or A.M. Best. While A.M. Best is the standard against which most major companies are measured for financial stability and creditworthiness, some companies lack some of the characteristics that qualify them for a rating by the firm. This is how Demotech emerged. The Florida homeowners insurance market is known for being expensive and having less options to choose from especially from major companies like State Farm, Allstate, Met Life, etc.,
Demotech looks at factors other than size and financials to determine stability so that consumers can have a benchmark against which to measure the stability of a smaller company they may need to use to insure their home in FL.
Some of the factors used by Demotech, Inc. to determine financial stability ratings include:
AM Best's methodologies for rating insurance companies and insurance-linked securities and structures are powered by strong analytical expertise, research, data, and insight. They help the financial industry and consumers understand how AM Best forms opinions of financial strength, creditworthiness, and the ability to meet policyholder or security holder obligations worldwide. uses the following methods to rate companies:
Best's Credit Rating Methodology (BCRM) is a comprehensive overview of the credit rating process, which consists of quantitative and qualitative evaluations of balance sheet strength, operating performance, business profile, and enterprise risk management.
Best's Insurance-Linked Securities & Structures Methodology (BILSM) outlines the process for rating insurance-linked securities and insurance-linked structures (ILS), and offers insight into the information requirements, key rating considerations, risk modeling and surveillance activities that are generally applied by AM Best.