young woman seeking health insuranceHealth insurance has been shown to improve the overall health of participants and lower disease rates through preventative care. Health insurance companies have a duty to provide affordable coverage that helps all participants to live a healthy life. Unfortunately, there are some health insurance companies out there that do not follow high standards or practices.

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These health insurance companies are not focused on improving people’s lives or health; they are only interested in making money. The worst health insurance companies are those that have a poor record of resolving customer complaints, those that have low financial ratings and those that have multiple violations and fines.

What is a poor record of resolving customer complaints?

Insurance companies that are not interested in providing good customer service will not work to resolve customer complaints. One outlet for consumers to voice their complaints is through The Better Business Bureau. The Better Business Bureau rates companies and charities, such as insurance providers, depending upon many factors.

The Better Business Bureau’s rating system is based on seven main factors:

  • The number of years a company has been in business
  • The type of business a company represents
  • Background information on a company
  • A company’s track record of resolving customer complaints
  • A company’s track record of honoring its commitments
  • Advertising issues
  • Any government or licensing actions against the business

The Better Business Bureau assigns letters to designate a rating for a business or charity. They range from A+ to F. The Bureau also gives information about which issues were used to determine a rating. However, there is not always sufficient information to rate a company.

What are poor financial ratings?

The U.S. Securities and Exchange Commission (SEC) labels a number of rating companies as Nationally Recognized Statistical Rating Organizations (NRSROs). These NRSROs rate the financial stability and credit rating of insurance companies and other forms of business. The worst health insurance companies will have low ratings, as their financial stability will be compromised through the loss of customers, fines, and poor business practices. The following are common NRSROs that can be used to check the ratings of an insurance company:

  • Fitch Ratings. Fitch uses an 11-point ratings scale from AAA to D. AAA implies a good financial standing with the least amount of risk. D denotes that the company is in default. The company also uses a plus and minus system to show possible future changes in a business’s rating.
  • Standard and Poor’s. Standard and Poor’s uses a 12 point system from AAA to D. The highest rating, AAA, shows the best ability for an insurance company to continue to meet its financial commitments. The lowest rating, D, means that the insurance company is in default. Standard and Poor’s also uses a plus and minus system to denote standings within the individual levels.
  • Moody’s. Moody’s uses a 9 point system from Aaa to C. Aaa indicates that a company is most likely to meet its obligations; C indicates that a company is not likely to meet its financial obligations, or that the company is in default. Moody’s also uses a 1, 2 or 3 within each rating level to indicate whether the rating is at the high, middle or low end of the category.
  • A.M. Best Ratings Company. A.M. Best uses a 16-point system from A++, or Superior, to D, or Poor. There is also E: under regulatory supervision, F: in liquidation and S: rating suspended.

How do you know if an insurance company has violations or fines?

Both the Better Business Bureau and the health insurance ratings companies will list information such as violations and fines about an insurance company, as long as the information is known. There are also other ways to find if an insurance company has had regulatory issues.

One way is to research an insurance company on the website of a state’s insurance regulation department. Most will list the history of a company, including any fines or violations.

Another outlet is to use the National Association of Insurance Commissioners’ Consumer Information Source (CIS) site to research an insurance company’s history.

Multiple violations and fines indicate that an insurance company does not follow best practices, industry standards, or even federal laws. More than likely, those underhanded business dealings are the exact way the company will handle any questions, claims, or problems that clients have. Health insurance is much too important to leave in the hands of a business that does not care about honesty and integrity.

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